Abstract
Cost–benefit analysis is an analytical technique that developed out of welfare economics and the concept of Pareto efficiency. It is utilized primarily in the public domain as a means of determining which alternative to the status quo will provide the greatest increase in social welfare. By assessing both the expected benefits of a policy or project, as well as the anticipated costs, it permits the assignment of expected net present values to each alternative. The largest challenges to conducting a robust cost–benefit analysis include predicting and monetizing impacts, utilizing the appropriate discount rate and accounting for uncertainty.
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Stromeyer, W.R., Barney, J.B. (2016). Cost-Benefit Analysis. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_408-1
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DOI: https://doi.org/10.1057/978-1-349-94848-2_408-1
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