...NY: Wiley. (pp. 913-915). MANAGEMENT DECISION MAKING A major concern in management has been to understand and improve decision making. Various approaches have been proposed by psychologists, most based on a “divide-and-conquer” strategy. This strategy – also labeled “problem decomposition” – involves breaking a large decision problem into smaller parts. The idea is not new: In a “Letter to Joseph Priestly,” Benjamin Franklin was one of the first to describe a decomposition strategy. The theoretical justification for this approach was outlined by Simon (1957) in his account of “bounded rationality.” This concept says that cognitive processing limitations leave humans with little option but to construct simplified mental models of the world. As Simon (p. 198) put it, a person “behaves rationally with respect to this model . . . (although) such behavior is not even approximately optimal with respect to the real world.” There have been two approaches to management decision making (Huber, 1980). The first is concerned with development and application of normative decision rules based on formal logic derived from economics or statistics. The second involves descriptive accounts of how people actually go about making judgments, decisions, and choices. NORMATIVE ANALYSES As initially outlined by von Neumann and Morgenstern (1947) in Theory of games and economic behavior, a variety of techniques have been derived for making optimal decisions. A distinction is often drawn between riskless...
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...Accounting Theory Learning Objectives Definition of theory and accounting theory The needs, purposes & benefits of AT Inductive & deductive approach to construct theory Descriptive, decision usefulness & welfare approaches to the construction of AT Structure of AT Relationship between AT & AP 1 Accounting Theory Defined as: A set of broad principles that provides a general frame of reference by which accounting practice can be evaluated and guides development of new practices and procedures. (Hendrickson, 1982) or A cohesive set of conceptual, hypothetical and pragmatic propositions explaining and guiding the accountant’s action in identifying, measuring and communicating economic information. 2 Nature and Purpose of Theory Theory can be defined as a set of general propositions, used as principles of explanation of the apparent relationship among certain observed phenomena, events or things. Proposition – statements concerned with the relationship among concepts. Concepts – generalized idea or expression in words about events observed in the real world. Theory is used as basis of explanation with regard to how/why certain phenomena happens the way they do. Explanation as well as prediction offers by theory is important as it enhance our understanding of the phenomena that exist in reality Generally theory is sometimes said to deal with the creation of scheme of ideas which provide definition of the problem observed and the understanding of it. 3 Needs and Importance of...
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...rector magnificus Prof.dr.C.W.P.M. Blom, volgens besluit van het College van Decanen in het openbare te verdedigen op woensdag 17 december 2003, des namiddags om 1.30 uur precies door Astrid Gisela Herabadi geboren te Bogor op 30 december 1969 Promotores: Prof. dr. B. Verplanken (University of Tromsø, Norway) Prof. dr. A.F.M. van Knippenberg Manuscriptcommissie: Prof. dr. J.A.J.P. Janssen Prof. dr. N.K. de Vries (Universiteit Maastricht) Prof. dr. M. Zeelenberg (Universiteit van Tilburg) Buying Impulses: A Study on Impulsive Consumption A scientific essay in Social Sciences Doctoral thesis to obtain the degree of doctor from the University of Nijmegen on auhority of Rector Prof.dr.C.W.P.M. Blom, according to the decision of the Council of Deans to be defended in public on Wednesday, 17 December 2003, at 1.30 PM precisely by Astrid Gisela Herabadi born in Bogor on 30 December 1969 Supervisors: Prof. dr. B. Verplanken (University of Tromsø, Norway) Prof. dr. A.F.M. van Knippenberg Manuscript committee: Prof....
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...Agency theory is based on the assumption that the individuals act to maximize their own expected utilities Relationship between one person (principal) entrusted to another person (the agent) RESIDUAL LOSS *Loss associated with no being able to fully align the intrst of principal with their agent BONDING COSTS *cost borne by the agent as a result of the aligning their interst EG: i)agent prepare the fs(effort & time) ii)Constraints manaher xtvt MONITORING COST *the cost observing & monitoring the agent’s behaviour EG: I )auditing cost ii)Budget restriction iii) Operating rules Agency Costs -due to self interst, the agent may act for their best interest. -Agency problem give rises the agency costs JENSEN & MECKLING (1976) *Contract under which on or more (principals) engage another person (the agent) to perform some service on the principal’s behalf which involves delegating some decision making authority to the agent *Utility maximization by both parties (eg: there is no reason to believe that the agent will always act in the principal’s best interest.) Agency problem -problem of inducing an agent to behave as if he were maximizing the principal’s welfare. Focus on delegation of jobs from principal to the agent AGENCY THEORY POSITIVE -Descriptive, explanatory or predictive -describe how people do behave -largely dismissive NORMATIVE -Prescriptive -prescribe how people (acctnt) should behave to achieve an outcome...
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...Accounting theory without a doubt, has transformed rapidly throughout the years due to changes in society, environment, globalization, and the expansion of various industries, which ties in with the needs for new accounting standards. However, some basic aspects remain the same, for example, the double entry system. These drastic changes throughout the years call for a change in the accounting standards and in order for accounting standards to be fair, efficient, reliable and reflect modern practices researchers require several methods to gain more perspective and a better vantage point on the situation to ensure the best possible accounting standards are created to suit each particular accounting phenomenon. These include the descriptive and prescriptive methods, which are almost exact opposites in theory. Theorists seek to explain phenomena such as asset valuation, the demand and supply of accounting information, and what sort of accounting information should be provided to particular users through these two methods. The aforementioned theories can never be proven so researchers aim to create the best possible standards and answer to these phenomena by shuffling back and forth between methods and provide different perspectives on one subject. Other researchers including Grady, Watts and Zimmerman, Paton, etc. have laid the necessary groundwork and this allows modern researchers to theorize and apply past theories to modern accounting phenomena. Descriptive methods of...
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...anarchies are organizations characterized by problematic preferences, unclear technology, and fluid participation. These are organizations-or decision situations-characterized by three general properties. 1) Problematic preferences: In the organization it is difficult to impute a set of preferences to the decision situation that satisfies the standard consistency requirements for a theory of choice. The organization operates on the basis of a variety of inconsistent and ill-defined references. It discovers preferences through action more than it acts on the basis of preferences. 2) Unclear Technology: Although the organization manages to survive and even produce, its own processes are not understood by its members. It operates on the basis of simple trial-and-error procedures, the residue of learning from the accidents of past experience, and pragmatic inventions of necessity. 3) Fluid Participation: Participants vary in the amount of time and effort they devote to different domains; involvement varies from one time to another. As a result, the boundaries of the organization are uncertain and changing; the audiences and decision makers for any particular kind of choice change capriciously. They are particularly conspicuous in public, educational, and illegitimate organizations. To build on current behavioural theories of organizations in order to accommodate the concept of organized anarchy, two major phenomena critical to an understanding of anarchy must be...
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...International Journal of Psychology and Psychological Therapy 2007, 7, 3, 381-391 Factors that affect decision making: gender and age differences María L. Sanz de Acedo Lizárraga*1, María T. Sanz de Acedo Baquedano1, y María Cardelle-Elawar2 1 2 Universidad Pública de Navarra, España Arizona State University West, USA ABSTRACT In this study, the influence of gender and age in the importance allocated to several factors in the decision process was investigated from a naturalistic perspective. For this purpose, the Decision-Making Questionnaire, DMQ was administered to a sample of 589 participants (294 men and 295 women) of ages between 18-80 years old, who were grouped into three developmental stages: youths 18-25 years (n= 207; 97 men and 110 women); adults 26-65 years (n= 205; 110 men and 95 women), and retired persons 66-80 years (n= 177; 87 men and 90 women). The statistical analyses revealed significant differences due both to gender and age in participants’ perception of the factors that determine their decision processes. Keywords: Decision-making, Decision task, Gender, Age. RESUMEN En este estudio se investigó, desde el enfoque naturalista, la influencia que tienen el sexo y la edad en la importancia que se otorga a ciertos factores en el proceso de decisión. A tal fin, se aplicó el Cuestionario de Toma de Decisiones (CTD) a una muestra formada por 589 participantes (294 hombres, 295 mujeres) de edades comprendidas entre 18 y 80 años, agrupados en...
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...Values, rewards, and costs play a central role in economic, statistical, and psychological notions of decision making. They also have surprisingly direct neural realizations. This chapter discusses the ways in which different value systems interact with different decision-making systems to fashion and shape affectively appropriate behavior in complex environments. Forms of deliberative and automatic decision making are interpreted as sharing a common purpose rather than serving different or non-normative goals. Introduction There is perhaps no more critical factor for the survival of an organism than the manner in which it chooses between different courses of action or inaction. A seemingly obvious way to formalize choice is to evaluate the predicted costs and benefi ts of each option and pick the best. However, seething beneath the surface of this bland dictate lies a host of questions about such things as a common currency with which to capture the costs and benefi ts, the different mechanisms by which these predictions may be made, the different information that predictors might use to assess the costs and benefi ts, the possibility of choosing when or how quickly to act as well as what to do, and different prior expectations that may be brought to bear in that vast majority of cases when aspects of the problem remain uncertain. In keeping with the complexity and centrality of value-based choice, quite a number of psychologically and neurally different...
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...Introduction The usefulness of accounting theory is evident at various levels within the accounting profession and society in general including, standard setters, accounting professionals and users of accounting information. This essay will address two key areas, firstly, a personal reflection on this course and why studying theory is essential for practicing accountants. The second part is a critical evaluation of the conceptual framework and why it is an essential part of accounting literature. Areas evaluated include the purpose and benefits of a conceptual framework, a brief history of it in Australia, principle based versus rules based standards and some criticisms of it are discussed. Personal reflection I must admit, when scrolling through the list of courses I have left to complete my degree Accounting Theory did not jump out as one I was eager to enrol in. This is in no small part due to my lack of appreciation of how knowledge of the development of theory can give context and power to understanding changes. Whereas before I was more about practice and ‘getting it done’, it has become apparent that theory generally is an intrinsic element in advancing our understanding of our environment, culminating in improvements in practice. It is not a means of simply explaining or predicting behaviour, nor is it there only to serve as a framework for further inquiry (although these are important benefits of theory). Theory has a much more significant and elegant role to...
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...Public Policy Scholars view decision-making as public participation and explore how various stakeholders (e.g., citizens, industry representatives, governmental agencies) can impact decision making processes, such as environmental issues (Depoe, Delicath, & Elsenbeer, 2004). This research examines how engagement in decision-making is impacted by the ways in which problems and solutions are communicatively defined and framed (Depoe et al., 2004). Health Communication Health communication research on decision-making focuses on the communication that occurs between patient-provider, patient-family, and among health professionals in making decisions. This research focuses on how decisions are made regarding treatment and prevention options (Marks, Ok, Joung, & Allegrante, 2010; Quillin, Tracy, Ancker, Mustian, Ellington, Viswanath, Miller, 2009), donor decisions (Brown et al., 2008; Smith et al., 2010), and health risk communication (Ozanne, Wittenberg, Garber, Weeks, 2010). This research tends to be both descriptive and prescriptive in approach, as the potential health outcomes studied are crucial and linked to illnesses such as cancer (Marks et al., 2010). In these contexts, decision-making is usually shared, defined as “a process in which the patient and providers consider outcome probabilities and patients’ preferences and reach a health care decision based on mutual agreement” (Orchard, King, Khalili, & Bezzina, 2012, p. 60). Embedded in this is an emphasis on the active...
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... SYDNEY MANAGEMENT UNDER UNCERTAINTY OCTOBER 4TH, 2014 ASSESSMENT ONE Review a decision you have observed in the workplace. If you have limited workplace experience, you may focus on a decision you have observed in another situation. You should only have observed this decision making situation; you should not have participated in it. SUMMARY OF OBSERVATION To run a successful business in this age depends largely on the IT infrastructure the business functions with. To improve efficiency and reduce operational cost for organisations, IT systems (software and hardware) have to be put in place, in cases where these systems exist already, a continuous upgrade of existing systems are required for optimal functionality. Implementing operational changes in an organization suffers setbacks, if the organisation does not plan and strategize on how to carry out changes. As technology evolves, the upgrading of existing technology is a challenge affecting most organizations today. The upgrade from an older operational software to a newer version aims to improve ease of usage, fix glitches observed in the old software, improve performance and cut down on operational down time. The decision made in this case was to upgrade to newer server software for the IT system that catered for the organization’s operations. The COO who is in charge of making operational decisions in the organization made the decision without consulting senior managers or IT Department Head. The COO directed the IT...
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...http://dotlrn.aubg.bg/dotlrn/classes/departmentofcomputerscience/sINF370/INF370S12/file-storage/view/Handouts/Privacy_and_Security_-_Emotion_and_Security-Communications_of_ACM-February2012.pdf Make a short resume (about 200 words) of the publication. Responses to presumed threats or attacks are usually emotionally based. People tend to misunderstand or shift their attention to risks that are not very high while forgetting about the not-so-obvious threats. However, these threads are in most cases far more dangerous than the obvious and easy to predict dangers. According to Prospect Theory models individuals tend to weight probability not in the linear fashion advocated by standard normative models of probability theory, but rather the subjective functions that overvalue certain low-probability events. Fear and anger make people anxious and nervous, cause them to make worse decisions and make mistakes. 2. Using AUBG Web find what information security policy, standards, practices and procedures exist. What is the most important for a policy to be effective? http://www.aubg.bg/RapidASPEditor/MyUploadDocs/Information_Security_Guide.pdf For a policy to be effective it needs to be observed and applied. No matter how great a policy is if people do not comply with it it’s useless. 3. Any criticism to the existing at AUBG policies, practices and procedures related to information security, computing and communications as a whole? It takes too long to verify...
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...Laroche being prescriptive and descriptive Laroche follows a prescriptive method in arguing for decision making theory. He argues it is a social representation which will improve decision making. In his abstract he writes “The paper argues that […] the concept of organizational action should not be opposed to decision and decision-making. Decision and decisionmaking are best understood as social representations […]. As organization members think and act in terms of decision-making, a theory of organizational action cannot simply do without a theory of decision-making. “ showing clearly that he is prescribing a certain way of looking upon decision-making. This is further strengthened in the conclusion where he for example writes “This paper argued that decision-making is best understood as a process of reality creation through organization members’ representations of their own role and activity.” The extent to which Laroche is prescriptive is debatable however. He acknowledges descriptive factors such as when he claims in conclusion that “no theory of action can develop without integrating the fact that, to a significant extent, organizational members think and act in terms of decision-making... a relevant phenomenon for a theory of action, not a marginal one”. He lists examples from empirical studies in describing the decision-making process: “bureaucratic processes (e.g., Cyert and March 1963, Carter 1971), political processes (e.g.. Bower 1970), psychological...
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...finished. The word limits are indicated at the end of each section. This is neither an essay or a report; it is simply an assignment with 3 sections. It does not need to have an introduction or a conclusion. Clarity is achieved by clear section headings, and clear paragraphing. NB: our example does not reach 1500 words; further paragraphs need to be written in sections 2 and 3. The Decision A mining claim of 60 miles had to be staked, and the project manager Tom Parker decided to budget 7 days and 3 assistants to do it. He based this decision on his own physical experience and skill. He was an outdoors man, skilled in all non-technical aspects of mining claims. He himself proved able to do 8 claims per day, and he assumed that each assistant would be able to do the same. The workers were poorly paid, but if they completed the job in 7 days they would receive a $300 bonus. Parker may have negotiated this bonus with the company when he budgeted 7 days. The main outcome of this decision was that the job was not completed in time. There were several smaller consequences of the initial budgeting decision that resulted in this outcome. No planning of the details was done until after Parker and the men set up camp. Only at this stage did they consider differences in the terrain, the order of areas to be staked, and where the helicopter might land. Progress was uneven, and Parker seemed to lay most of the blame on Millar. Talbot suggested to Parker that he could give Millar the easier...
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...spiritual life. I have always patterned myself as a seeker. The normative theory of deontology enamors me to want more of logos. Consequentialism stats that when you make a decision you truly do not know the consequences until after the action has ended. Which is only partial to the outcome of our action. A deontologist knows that all means have a consequence and in reasoning you can know what some of those consequences are before even making that action. Such an example would be that a consequentialist jumps of a cliff in hopes that he can fly only to find that his actions did not pan out and he is splat on a ground. A deontologist argues that if he would jump off a cliff he would not fly because of the pressure he feels whenever he picks something up off the ground. Neither has studied physics but, the deontologist knows that all actions have a reaction because of rationality or a drawing of logical inferences. A deontologist will base a right or wrong action on the duty to do something or not do something, one’s own intentions and a list of established rules. So a deontologist stats that all people who cheat on their taxes are criminals, which is a principle but, a consequentialist would argue that cheating on my taxes is only wrong if the outcome is negative. So in both consequentialists and in deontology we find that there are many differences and abilities to have opinions and stick with the core of the theory. But...
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