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When a consumer purchases an item, the presumption is that the benefit obtained from it exceeds the price paid-we can think of this difference as the consumer profit. How do consumers calculate this profit, especially when they do not immediately consume the purchased item? This technical note presents a model of mental accounting that gives insights into the process that consumers follow to calculate value. It compares rational logic, accounting logic, and mental accounting logic, incorporating the phenomena of loss aversion, transaction utility, and consumer anomalies. This note is used at Darden in the second-year "Behavioral Decision Making" course. It would also be suitable in courses covering rational decision making in business.

This note introduces the first module of the RC Strategy course, What Is Strategy? It helps students develop their perspective on what is a strategy, what is a good strategy, and how strategy development differs across contexts.

The goal of this technical note is to give students tools for thinking about how exchange rates will move over a period of five years into the future. While forecasting exchange rates is arguably more art than science, managers, policymakers, and investors are nonetheless often required to form opinions about the future evolution of exchange rates. Specifically, this note defines the real exchange rate and purchasing power parity (PPP) and illustrates that PPP is useful in forecasting nominal exchange rate movements for advanced economies (AEs). For emerging market economies (EMEs), the note explains that PPP is less useful and instead offers a relatively new International Monetary Fund (IMF) model, which evaluates exchange rate over- and undervaluation in EMEs (as well as AEs). The note is designed to be used in a first-year MBA course, specifically in a class structured around exchange-rate forecasts based on recent supplemental data (to be added by the instructor). In that case, the class would build from a question like, "What will the US dollar/British pound exchange rate be in five years, and why?" Note that the IMF material is advanced and, depending on the level of the students and place in the course, may need to be presented as a useful "black box." In any case, this note could also be employed in an advanced undergraduate or master's level course on international finance or macroeconomics.

This note is an introduction to using macroeconomics in evaluating the long-term growth prospects of emerging markets. Methodologically, it is an application of growth theory, the Solow model in particular, and it gives students the opportunity to practice reading and interpreting the data of international macroeconomics. The textbook Solow growth model and its basic extensions align well with how investors and policymakers think about forecasting growth and stagnation in emerging markets. However, using public data to measure everything that affects Solow factors is not trivial or necessarily possible, so the note explains the broader, but nonetheless "Solow" approach, of Ruchir Sharma at Morgan Stanley. The note provides data on direct and indirect "canary in the coalmine" growth factors. Classes using the note should center on the question, how do we find the next BRICs? The note is designed as a practical follow-up to growth theory in a first year MBA course, but it would also be appropriate for use in a master's or advanced undergraduate course on growth, emerging markets, or international finance.

When we introduce macroeconomic models, we assume that goods and services are exchanged within a single country but not across countries. This assumption is useful for understanding some of the primary determinants of output, inflation, and interest rates. In reality, however, economies trade with each other, and the presence of international markets has implications for national economies. In this note, we incorporate international markets to understand how changes in one country can affect other countries.

This note provides a brief overview of the history of Saudi Arabia as well as the economic and political context in 2018. The note is an essential supplement to the case "Almarai Company: Milk and Modernization in the Kingdom of Saudi Arabia," HBS No. 719-020, but is also appropriate for other relevant cases.

This note focuses on managers' responsibilities-economic, legal, and ethical-to investors. In capitalist and some socialist economies, these responsibilities traditionally have been grounded in fiduciary duties and are typically part of the common law or statutory law or are incorporated in civil codes. But, as this note will show, fiduciary obligations are deeply intertwined with economic and ethical responsibilities.