CHAPTER 14 A Universal Measurement Method: Applied Information Economics

LEARNING OBJECTIVES

  • Briefly describe the background to the author’s development of Applied Information Economics.
  • Learn the five-step framework and explain how it applies to each of the cases.
  • Outline the four phases for each of the three cases.
  • Describe some considerations for measuring quality, value, innovation, information availability, and flexibility.
  • Describe how flexibility measurements relate to options theory.
  • Briefly summarize the philosophy behind Applied Information Economics.

CHAPTER OVERVIEW

Chapter NaN combines the lessons of the book into a chapter outlining the steps and philosophy behind Applied Information Economics. The author reveals a bit about his background and the development of the method. The process can be broken up into four phases.

Three practical case examples are provided to elucidate Applied Information Economics. We are shown how to value a system that monitors your drinking water, forecast fuel for the Marine Corps, and measure the value of standards. A few final examples of measurements of quality, value, innovation, information availability, and flexibility are provided. The chapter closes with a summary of the Applied Information Economics philosophy.

QUESTIONS

  1. What is the difference between the way the author and the attendees at the Chicago Club define whether an investment is “strategic”?
    1. AIE would never reject a “strategic” investment.
    2. The attendees ...

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