The Assignment Sometimes one’s choices may involve catastrophic decisions and bear great risk and yet there can be no clear answer. For example, if a person gets a divorce, shutters a plant, sells a losing investment, or closes their business, will he or she be better off? The following case incorporates nearly all of the material you have covered this far and presents an example of one such choice where nearly all of the alternatives have a significant downside risk. Review the following information from the article “A Cost-Benefit Analysis of the New Orleans Flood Protection System” by Stéphane Hallegatte (2005): Hallegatte, an environmentalist, assigns a probability (p) of a Katrina-like hurricane of 1/130 in his cost-benefit analysis for flood protection. However, the levees that protect New Orleans also put other regions at greater risk. You may assume the frequency of other floods is greater than Katrina-like events (Vastag & Rein, 2011). The new levees that were built in response to Katrina cost approximately fourteen billion dollars (in 2010). This is in addition to the direct costs of Katrina (eighty-one billion dollars in 2005). 50 percent of New Orleans is at or below sea level. A 100-year event means that there is a 63 percent chance that such an event will occur within a 100-year period. The following are the interested (anchored and/or biased) constituencies: Residents of New Orleans—both those that can move and those who cannot move Residents of the surrounding floodplains at risk from New Orleans levees The Mayor of New Orleans The federal government—specifically taxpayers and the Federal Emergency Management Agency (FEMA) Assume that the availability heuristics make people more risk averse (populations drop, at least in the short term). Consider how this would affect the local economy. You are an analyst at FEMA and are in charge of developing a recommendation for both the state and the local governments on whether or not to redevelop New Orleans. Write a report with your recommendation. Address the following in your report: Part A Analyze the economics of New Orleans in light of the above parameters and develop your own Cost-Benefit Analysis (CBA) for rebuilding. Evaluate the value of the CBA for each constituency and integrate these estimates into a scenario model and/or decision tree. Analyze the results. Clearly each of these constituencies may both overlap and be prey to a variety of group dynamics internally. For one of these options, discuss the decision pitfalls to which they may be susceptible and make a recommendation on how to alleviate these pressures. Starting with your CBA, estimate the relevant expected utility for the interested constituencies . Note: You need not have absolute amounts but your relevant utilities should be proportional to one another. Hint: If you assume that your total CBA for New Orleans is fixed for each constituency (do not forget the overlaps), then each constituency will have .

1. The Assignment
Sometimes one’s choices may involve catastrophic decisions
and bear great risk and yet there can be no clear answer. For
example, if a person gets a divorce, shutters a plant, sells a
losing investment, or closes their business, will he or she be
better off? The following case incorporates nearly all of the
material you have covered this far and presents an example of
one such choice where nearly all of the alternatives have a
significant downside risk.
Review the following information from the article “A Cost-
Benefit Analysis of the New Orleans Flood Protection System”
by Stéphane Hallegatte (2005):
Hallegatte, an environmentalist, assigns a probability (p) of a
Katrina-like hurricane of 1/130 in his cost-benefit analysis for
flood protection. However, the levees that protect New Orleans
also put other regions at greater risk. You may assume the
frequency of other floods is greater than Katrina-like events
(Vastag & Rein, 2011).
The new levees that were built in response to Katrina cost
approximately fourteen billion dollars (in 2010). This is in
addition to the direct costs of Katrina (eighty-one billion dollars
in 2005).
50 percent of New Orleans is at or below sea level.
A
100-year
event means that there is a 63 percent chance that such an event
will occur within a 100-year period.
The following are the
interested (anchored and/or biased)
constituencies:
Residents of New Orleans—both those that can move and those
who cannot move
Residents of the surrounding floodplains at risk from New
Orleans levees

2. The Mayor of New Orleans
The federal government—specifically taxpayers and the Federal
Emergency Management Agency (FEMA)
Assume that the availability heuristics make people more risk
averse (populations drop, at least in the short term). Consider
how this would affect the local economy.
You are an analyst at FEMA and are in charge of developing a
recommendation for both the state and the local governments on
whether or not to redevelop New Orleans.
Write a report with your recommendation. Address the
following in your report:
Part A
Analyze the economics of New Orleans in light of the above
parameters and develop your own Cost-Benefit Analysis (CBA)
for rebuilding.
Evaluate the value of the CBA for each constituency and
integrate these estimates into a scenario model and/or decision
tree. Analyze the results.
Clearly each of these constituencies may both overlap and be
prey to a variety of group dynamics internally. For one of these
options, discuss the decision pitfalls to which they may be
susceptible and make a recommendation on how to alleviate
these pressures.
Starting with your CBA, estimate the relevant expected utility
for the
interested constituencies
.
Note:
You need not have absolute amounts but your relevant utilities
should be proportional to one another.
Hint:
If you assume that your
total
CBA for New Orleans is fixed for each constituency (do not
forget the overlaps), then each constituency will have a piece of

3. the utility pie.
Part B
Make a case for or against rebuilding the city of New Orleans.
This should be an executive summary; be concise and brief.
Include exhibits.
Whether you are for or against, discuss how social heuristics
could be used to your advantage, both ethically and unethically,
in making your case. You may choose to fill the role of one of
the constituents, if you prefer.
Write an 8–12-page report in Word format. Apply APA
standards to citation of sources. Use proper spelling and
grammar throughout, and keep the text legible and balanced
with visuals. Use the following file naming convention:
LastnameFirstInitial_M5_A1.doc.
By
Saturday, October 4, 2014
, deliver your assignment to the
M5: Assignment 1 Dropbox
.
Hallegatte, S. (2006). A cost-benefit analysis of the New
Orleans flood protection system.
Center for Environmental Sciences and Policy
. Stanford University. Retrieved from
http://hal.cirad.fr/docs/00/16/46/28/PDF/Hallegatte_NewOrlean
s_CBA9.pdf
Vastag, B., & Rein, L. (2011, May 11). In Louisiana, a choice
between two floods.
The
Washington Post
. Retrieved from
http://www.washingtonpost.com/national/in-louisiana-a-choice-
between-two-
floods/2011/05/11/AFrjFotG_story.html

4. Assignment 1 Grading Criteria
Maximum Points
Analyze the economics of New Orleans in light of the given
parameters and develop a Cost- Benefit Analysis (CBA) for
rebuilding.
32
Evaluate the value of that CBA for each constituency and
integrate these estimates into a scenario model and/or decision
tree. Analyze the results.
68
Discuss the decision pitfalls to which constituencies may be
susceptible and make a recommendation on how to alleviate
those pressures.
32
Starting with the CBA, estimate the relevant expected utility for
these parties.
32
Make a case for or against rebuilding the city of New Orleans.
This should be an executive summary—be concise and brief.
Include exhibits.
68
Discuss how social heuristics could be used to an advantage,
both ethically and unethically, in making a case.
32
Estimate what percentage of the class was for, versus against,
rebuilding and provide a confidence interval for the estimate.
8
Ensure academic writing, such as grammar, spelling, and
attribution of sources, is appropriate.
28
Total:
300