SEE01 Introduction to Software Engineering Economy

Introduction to Software Engineering Economy

THE ECONOMIC WAY OF THINKING

• Choice is a tradeoff
• People make bounded rational choices( by comparing costs and benefits )
• Benefit is what you gain from something
• Cost is what you must give up to get something
• Most choices are made at the margin(one additional unit)
• Choices respond to incentives

 

Economic Models

 

Check Models Against Fact

• Natural experiments: 

• the one factor of interest is different and other things are equal

• Statistical investigations: 

• correlation: the tendency for the values of two variables to move together in a predictable and related way

• Economic experiments:

• puts people in a decision making situation and varies the influence of one factor at a time to discover how they respond.

Disagreement

• normative statements(规范声明) - statements about what ought to be.( can’t be settled by facts )
• positive statements (实证声明) - statements about what is.(can)