Managerial Economics Problem-Solving in a Digital World

Managerial economics provides a toolbox for solving problems that managers frequently face. It addresses issues relating to any aspect of decision making that ultimately affects the profit of a firm. Although the general methodology of managerial economics has not changed over the decades, there have been rapid and significant changes in the business environment in the last ten years or so, and three new themes have become increasingly important: digitization; behavioural aspects; and globalization. The first of these developments involves aspects of big data and advanced data analytics, the human-machine interface and the interconnectedness of electronic devices. The second relates to psychological aspects of decision making that cause both consumers and managers to engage in behaviour normally referred to as ‘irrational’. The third development is that improvements in technology relating to digitization have made the business world more interconnected. The text makes heavy use of recent case studies involving these three themes, for example on tech firms, Covid-19 and climate change, so students can see how the tools of managerial economics can be applied in real-life situations.