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DAEN 427 / ISEN 427
Decision and Risk Analysis

Fall 2026

Description

In this course we’ll learn how to model decisions, risk, and preferences using Bayesian inference. We’ll explore how to make choices under uncertainty and how those choices differ from rational models. Drawing from economics, psychology, and management science, we’ll apply these ideas to engineering systems.

Files

Schedule

This schedule may be updated as the semester progresses with all changes documented here (E-mail announcements will be made prior to any potential changes).

Lecture Topic Chapter
1 Bayesian thinking for risk and decision analysis Ch. 1
2 Bayesian updating and evidence accumulation Ch. 2
3 Prior modeling and expert knowledge Ch. 3–4
4 Bayesian simulation and uncertainty propagation Ch. 5–6
5 MCMC and computational Bayesian inference Ch. 7
6 Bayesian workflow and model validation Ch. 8
Exam 1: Bayesian foundations + computation
7 Bayesian regression for risk modeling Ch. 9
8 Bayesian prediction and model comparison Ch. 10
9 Multiple regression and decision drivers Ch. 11
10 Bayesian count models and rare events Ch. 12
11 Bayesian classification and logistic risk models Ch. 13–14
12 Hierarchical Bayesian models Ch. 15–16
Exam 2: Predictive modeling + risk analysis
13 Advanced multilevel and structured uncertainty models Ch. 17–18
14 Bayesian decision analysis and probabilistic forecasting Ch. 19
Final project: probabilistic programming, risk communication

Resources

Bayes' theorem

"Risk comes from not knowing what you're doing." Warren Buffett

"Project success is not about avoiding risks but about making better decisions when they appear."

"It is not the strongest or the most intelligent who will survive but those who can best manage change and uncertainty." adapted from Charles Darwin

"Even one well-done observation will be enough in many cases, just as one well-made instrument often suffices for the establishment of a law." Émile Durkheim

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