The most important decisions in business and government are also those with higher uncertainty and more factors that appear to be immeasurable. Risk, value, performance, and quality are just a few factors that need to be measured in order to manage them. Making economically rational decisions is becoming both more important and more difficult.

Yet, the most common methods used for assessing risky decisions are shown to provide mostly a "placebo" effect - management feels better but there is no measurable improvement in decisions or forecasts. Traditional accounting-style cost/benefit analysis does not quantify uncertainty and often excludes factors that are thought to be unquantifiable. Other methods attempt "soft" analysis techniques that add their own errors to the decision process while causing management to feel they are doing something about the problem.

If you are an executive in a position to make big decisions in your organization, you probably have asked yourself many of the following questions:

• How can I compute a return on an investment if most of the benefits seem "intangible"?
• How do I measure and manage risk when there is little historical data on this kind of investment?
• How do I calculate the value of more, better, or faster information?
• Is there any alternative to our subjective and politically driven decision process?

The AIE Solution

Applied Information Economics (AIE) is the first truly scientific and theoretically sound method developed for addressing the dilemmas even when they are thought to be too soft or uncertain for such methods. AIE uses methods that show independently, scientifically measured improvements to management forecasts and decisions. Even so-called intangibles like information value have proven economic formulae used for years in other areas of business.

Applied Information Economics: A Synthesis of Methods

• Economics
• Operations Research
• Modern Portfolio Theory
• Decision Psychology
• Decision Theory
• Game Theory
• Options Theory
• Quantitative Risk Analysis

AIE synthesizes several methods from economics, actuarial science, decision theory and Modern Portfolio Theory. This has been widely used in many practical business environments including insurance, manufacturing, transportation, utilities, banking, .com startups, and media. AIE is a complete-solution methodology that includes training, tools, process documentation, and initial consulting.

Unlike methods that produce arbitrary "scores" or unrealistic ROI's, AIE conducts a true "Risk/Return" analysis that would be recognizable to actuaries, economists, and financial analysts. All measurements are real measurements that are based on proven methods and have a known statistical validity.

AIE provides a measurable improvement for management decisions. This is the only method that can actually compute its own information value. Based on information value, AIE can be shown to be one of the most valuable investments in your portfolio of decisions. And the cost of AIE averages 2% or less of investments that it is used to assess.

In short, the best way to spend 2% of a budget is to figure out how to spend the other 98% in an economically rational way. Contact us at to find out how AIE can solve your management dilemmas.

An intensive two-part webinar
Price: $1,450.00

Doug Hubbard, the author of How to Measure Anything and the inventor of Applied Information Economics (AIE) will describe how to use his methods to measure any “intangible,” to think of risk like an actuary, and how to look at any investments, policies or portfolios from a risk/return point-of-view. The first 3.5-hour module of this two-module training is the AIE Module I, an overview the AIE measurement approach designed for any analyst to C-level person who has responsibility for creating, reviewing or acting on business cases or performance metrics for IT or any other portfolio of investments. (See AIE Module I Product below for details)

The second 3.5-hour module builds on Module I and focuses on practical examples and cases. This module is updated with material from Hubbard’s new book, The Failure of Risk Management. In the AIE Module II, the participants will see and be involved in an application of AIE in a practical IT investment problem including:

• Converting the basic business case to a Monte Carlo case with calibrated estimates
• Computing information values and designing measurements
• Plotting results against risk/return preferences and conducing basic portfolio optimization

Schedule for Summer 2010  (All times are US Central Time)

Modules I & II are two 3.5 hours sessions taught on consecutive days on the following dates:

September 23-24, (Thursday, Friday), 9:00am to 12:30pm
October 18-19, (Monday, Tuesday), 1:00pm to 4:30pm
November 22-23, (Monday, Tuesday), 5:00pm to 8:30pm

How to quantify your uncertainty
Price: $580.00

In this 3.5-hour webinar, Doug Hubbard will teach you the techniques behind subjectively assessing the probability of uncertain events and the ranges of uncertain quantities. This is an essential skill for anyone who needs to consider chance in decisions. Participants will see their skills measurably improve during the training with a series of "calibration exams." You will also learn some of the the techniques involved in training others to be calibrated.

Schedule for Summer 2010 (All times are US Central Time)

September 24, (Friday), 1:30pm to 5:pm
October 19 (Tuesday), 8:30am to noon
November 22 (Monday), 1pm to 4:30pm

Webinar on the science about which analysis methods work
Price: $120.00

In this 90 minute webinar, Doug Hubbard will explain why many of the most popular decision support methods - including business cases, portfolio prioritization, risk analysis and even performance metrics - don't really work as intended. Many decision makers experience a kind of "placebo effect" and have confidence in their scoring methods and business cases. However, research shows their estimates and decisions are not improved at all and can even be much worse. Learning how to tell analysis methods that work from what doesn't should be the priority of every key decision maker. In order for a decision analysis method to "work," it has to be able to show that decision makers make better decisions and forecasts on average than they would using their intuition alone. Don't let your next big decision be made by something that makes you feel better about decisions but doesn't actually improve them on average.

Schedule for Summer 2010 (All times are US Central Time)

September 23, (Thursday), 2:00pm to 3:30pm
October 19, (Tuesday), 5:30pm to 7:00pm
November 23, (Tuesday), 10:00am to 11:30am

The Executive Overview of Applied Information Economics
Price: $825.00

Doug Hubbard will introduce the webinar participants to the Applied Information Economics (AIE) methods so they can measure any “intangible,” think of risk like an actuary, and look at any portfolio from a risk/return point-of-view. This introductory module is for anyone from the CEO and down who needs to find better measurement, risk analysis, and value assessment solutions. It includes the following topics:

• Introduction to Applied Information Economics & Measurement: A method for measuring anything and the three reasons why all perceived "immeasurability" is an illusion.
• Dangerous Pitfalls: Learn why some popular decision making and risk assessment methods may seem to work but don't.
• Understanding Measurement & Risk: Participants will learn how to think about risk quantitatively.
• Calibrated Probability Estimates: An introduction to methods to quantify your own uncertainty about anything.
• Monte Carlo Simulations: How we “do the math” when we have no exact numbers.
  The Impact: How AIE can radically effect what and how you measure and the decisions you make.

Schedule for Summer 2010 (All times are US Central Time)

September 23, (Thursday), 9:00am 12:30pm
October 18, (Monday), 1:00pm to 4:30pm
November 22, (Monday), 5:00pm to 8:30pm

Price: $120.00

The most powerful measurement tool for social trends, economics, company image and political opinions is also the most underutilized. The largest repository of human knowledge that ever existed – the Internet - is also the largest record of human interests and activities. But new tools are being rapidly developed that all a real-time assessment of these trends. It many cases, it would be similar to having the equivalent of a “Dow Jones Index” for your company image or the risks of terrorism.

From forecasting flu outbreaks to movie box office success, from measuring unemployment to consumer confidence, a combination of new tools and increased use of the internet offers a new and powerful opportunity for businesses and government. Even Amazon book ranks and ebay auctions can be used as indicators of public opinion and economic activity.

This webinar will introduce how this powerful resources can be used to assess market trends and public opinion before the slower and far more expensive, traditional government reports and Gallup polls are published. Any manager who doesn’t learn how to use this powerful resource will soon find themselves out of touch with the most important trends affecting their organization.

Schedule for Summer 2010 (All times are US Central Time)

September 23, (Thursday), 5:00pm to 6:30pm
October 18, (Monday), 10:00am to 11:30am
November 23, (Tuesday), 2:00pm to 3:30pm

Price: $420.00

Sign up for the next Level I Certification Exam for the Applied Information Economics method. A Level I Certified Analyst is qualified to perform supervised work in AIE analysis.