This course is an introduction to concepts and techniques of modern
financial modeling. Our central problem will be how to assign a
monetary value to an investment decision that has to be taken in an
uncertain environment. Canonical examples of this problem are the
decision to start a firm or to invest in a new project, but the ideas
explored in the course can be applied to a variety of other examples,
such as the decision to purchase a new book, to enroll in a
post-secondary education program, or to invest hours of work in a new
MBA course. In order to tackle this problem, we will extend the
traditional paradigm of Net Present Value of an investment using the
techniques of (1) real options to account for the value of time
flexibility of a decision under uncertainty and (2) game theory
to obtain the value of strategic competition and cooperation.
about the course are available in the course outline.