Cost-Benefit Analysis: Decision Making Insights

This lecture delves into the intricacies of cost-benefit analysis, exploring how individuals and public authorities make decisions based on weighing costs and benefits. The instructor discusses scenarios where decisions are made without this weighing process, the role of uncertainty, and the ethical considerations behind cost-benefit analysis. The lecture also touches on decision-making strategies such as following cues, habit, and deferred decision-making. Furthermore, the discussion extends to the limitations of cost-benefit analysis, including the challenges of valuing non-replaceable resources and the complexities of nonlinear systems.