Optimal warranty arrangements for the design of accounting information systems

This paper investigates optimal price/warranty arrangements for the design of accounting information systems (AISs) when the user of the system has alternative sources of information. A mathematical model is developed that focuses on two systems design scenarios commonly encountered in practice: (1) enhancement and (2) replacement. In an enhancement scenario the AIS user hires the AIS designer to enhance the value of the current AIS by incorporating additional features into the original system. Systems replacement, on the other hand, implies that the designer produces a new system that makes the original system obsolete. Under a replacement system, a simple limited warranty implements the user's optimal decision rule so that no losses occur due to unobservability of the user's decision. For the enhanced AIS design however, the user's action may depend upon the signal from the user's preexisting AIS. Therefore, when the user's decision is not observable, the designer does not know if the user's decision is a result of the systems enhancement or a result of the original system. Due to incomplete contracts, a more complex and costly warranty arrangement is required. Hence, losses occur under enhancement AIS although quality can be maintained with a limited warranty. Since it is difficult to assess the quality of the information system prior to purchase, the potential for a market failure exists where high-quality systems are driven from the market by low quality systems. These findings show that a market failure can be prevented in the design of information systems through contractual warranty arrangements. These warranty arrangements, however, must be tailored to the specific design task.     

Portfolio Analysis with Factors and Scenarios

Recently there has been a growing interest in the scenario model of covariance as an alternative to the one-factor or many-factor models. We show how the covariance matrix resulting from the scenario model can easily be made diagonal by adding new variables linearly related to the amounts invested; note the meanings of these new variables; note how portfolio variance divides itself into “within scenario” and “between scenario” variances; and extend the results to models in which scenarios and factors both appear where factor distributions and effects may or may not be scenario sensitive.     

Scenario projects in Japanese government: Strategic approaches for overcoming psychological and institutional barriers

Scenario planning in the public sector has significant differences from scenario planning in the corporate world. Scenario planning in the government not only tends to be focused on issues of higher complexity and significance to public policy, but also in comparison to people in the private business, public officials have fundamental psychological and institutional constraints in their scenario thinking. These constraints make it difficult for them to contemplate multiple ‘untidy’ futures and imagine the possibility of policy failure: skills which are essential for successful scenario projects. Based on specific characteristics of scenario planning in the Japanese government, this paper contributes on better understanding the challenges and strategic solutions in providing more successful scenario planning in the public sector. Specifically, this paper argues that possible solutions in overcoming these constraints may be to shake public bureaucrats out of their thinking by providing free and open venues of conversation and more importantly through ‘derailment’ exercises.     

Are people emotionally aroused by hypothetical medical scenarios in experiments? An eye tracking study with pupil dilation

Background: Many studies on the communication of medical risks use hypothetical medical scenarios. The results of these scenarios should have sufficient predictive accuracy to be generalized to real life; thus, it is important to know whether hypothetical medical scenarios work and whether there is a relationship between risk level and emotional arousal. Methods: In an eye tracking experiment (N = 67), we investigated the influence of a simple hypothetical medical scenario on pupil dilation, a measure of emotional arousal. In this medical scenario, the participants were shown three risk levels (low, middle, and high) and had to estimate the probability that a hypothetical patient has colon cancer. They were also given a non-medical scenario that controlled for changes in illumination and cognitive workload. Therefore, we supposed that the difference in pupil diameter between the medical and the non-medical scenario was due to emotional arousal. Results: We found that our hypothetical medical scenario had a significant effect on pupil diameter. The mean values of the mean pupil diameter in the first fifth of the fixations were higher for all risk levels in the medical scenario than in the non-medical scenario. In a more detailed analysis of the difference in pupil diameters between the two scenarios, we detected that, for the high-risk level, the emotional difference values (between the medical and non-medical scenarios) differed significantly from zero. Furthermore, we found that higher risk levels lead to higher emotional arousal and higher probability estimates. Conclusions: Even simple hypothetical medical scenarios cause emotional arousal. Thus, hypothetical medical scenarios work, and the results of studies not using real patients can be generalized to real medical situations.     

Tourism at Costalegre,Mexico: An ecosystem services-based exploration of current challenges and alternative futures

Tourism, as all human activities, is dependent on the natural environment and its respective ecosystem services (ES). Different user groups manage and consume these touristic ES differently, resulting in discrepancies and potential conflicts. Despite the urgency to find inclusive local approaches for sustainable development, tourism studies still analyze socio-economic and ecological impacts separately and lack integrated social–ecological approaches to improve foresight in tourism planning. Based on a growing concern regarding the future of Costalegre on the Jalisco coast of Western Mexico, we analyze through interviews, surveys, and participant observation the dependence of tourism on specific ecosystem services and conduct a scenario analysis which shows present and future implications for the social–ecological system. Furthermore, this analysis shows in detail how different scenarios change ES provision and people's livelihoods. Key findings include identifying freshwater provision and cultural ES as the most important touristic ES. At a regional scale, peasants in ejidos are the main ES stewards, whereas high-class tourism facilities constitute important local stewards. Benefits, mainly access to freshwater and the beach, are unequally distributed, provoking conflicts among different ES user groups that may escalate in the near future. Improved communication between all user groups and strengthening of key political actors seem to be the most immediate recommendations to ensure the long term sustainability of this particular region. This work may contribute to improved planning and decision-making as our ES based scenarios are a first step to integrate social–ecological knowledge into improved decision-making. At a local scale, the study reveals the most likely future development options and their social and ecological consequences. It could also serve as a baseline for informed policy making.     

SCENARIO GENERATION FOR OPERATIONAL RISK

Operational risk is an increasingly important area of risk management. Scenarios are an important modelling tool in operational risk management as alternative viable methods may not exist. This can be due to challenging modelling, data and implementation issues, and other methods fail to take into account expert information. The use of scenarios has been recommended by regulators; however, scenarios can be unreliable, unrealistic and fail to take into account quantitative data. These problems have also been identified by regulators such as Basel, and presently little literature exists on addressing the problem of generating scenarios for operational risk. In this paper we propose a method for generating operational risk scenarios. We employ the method of cluster analysis to generate scenarios that enable one to combine expert opinion scenarios with quantitative operational risk data. We show that this scenario generation method leads to significantly improved scenarios and significant advantages for operational risk applications. In particular for operational risk modelling, our method leads to resolving the key problem of combining two sources of information without eliminating the information content gained from expert opinions, tractable computational implementation for operational risk modelling, improved stress testing, what‐if analyses and the ability to apply our method to a wide range of quantitative operational risk data (including multivariate distributions). We conduct numerical experiments on our method to demonstrate and validate its performance and compare it against scenarios generated from statistical property matching for comparison. Copyright © 2013 John Wiley & Sons, Ltd.     

An updated scenario typology

Scenario analysis has evolved notably in its 50-year history and today there is a large diversity in the scenarios that are developed. Establishing an overview of this diversity would be useful for the further development of scenario method. However, such an overview cannot be generated without the use of a shared understanding of the typical features of scenario development and of the relevant terminology. A broadly shared scenario typology can provide this common understanding but existing typologies do not capture the diversity of scenario types. To this end we propose an updated typology, the presentation of which is the focus of this paper. We also explain how the typology was tested for its robustness in a comparative analysis of recent scenario projects.     

Using signposts in future studies: Lessons from the Justice for tomorrow project

Within the field of future studies, the scenario method is frequently applied. In the literature it is often stressed that it is important to know as soon as possible which of several scenarios is closest to the course of history as it actually unfolds. However, tracking scenarios via early warning mechanisms or signposts, is not a common practice. A standard methodology seems to be absent. Within the context of the Justice for tomorrow project, a scenario project of the Dutch ministry of Justice, we developed and applied a signpost method. We used this method to answer the question of how actual developments relate to the development paths depicted in the scenarios. In this paper we evaluate our approach. We explain what lessons can be learned regarding the use of signposts in future studies.     

Decision Processes, Agency Problems, and Information: An Economic Analysis of Capital Budgeting Procedures

Corporations use a variety of processes to allocate capital.This article studies the benefits and costs of several commonbudget procedures from the perspective of a model with agencyand information problems. Processes that delegate aspects ofthe decision to the agent result in too many projects beingapproved, while processes in which the principal retains theright to reject projects cause the agent to strategically distorthis information about project quality. We show how the choiceof a decision process depends on these two costs, and specificallyon severity of the agency problem, quality of information, andproject risk.     

Information Processing and the Challenges Facing Lean Healthcare

Radnor and Walley (2008) and others have identified a high failure rate in NHS lean rapid improvement events. This paper explores one reason why these failures occur: from the perspective of information processing (Galbraith, 1974), it explores the difficulties facing lean healthcare projects. Using qualitative method (pre‐understanding and interviews) with analysis triangulating between data, general theory and sense‐making we investigate two lean projects currently running at a Scottish hospital to identity how the absence of adequate information affects the projects. We find that the projects are critically hampered by the absence of project‐level, inter‐unit level and organisational level information. The practical implications of our research are to suggest that before embarking upon lean projects, hospital leaderships should explore the adequacy and integratedness of their information systems, decision‐taking structures and inter‐unit coordination mechanisms.     

The ageing of Europe: Demographic scenarios of Europe's futures

This paper explores the demographic futures of Europe by presenting two scenarios. The ‘silver century’ scenario is based on the continuation of current demographic trends and policies. In this scenario, Europe's population will continue to age and immigration will be limited. As a result younger people will increasingly tend to concentrate in urban areas while the retirees, who are able, will settle in suburban and rural spaces. In the ‘open borders’ scenario, the EU and most of the member states will introduce an open and actively promoted immigration policy. Most immigrants will concentrate in large metropolitan areas. At the same time there will also be some countries and regions with very limited immigration from abroad. At the local scale immigration will contribute to social and spatial segregation. Hence, without the regulation or at least management of types and destinations of immigration, demographic imbalances will not be addressed at the regional level. Furthermore while the freedom of movement may have some macro-economic benefits and address population imbalances in some (mainly metropolitan) areas, pre-existent trends undermining both socio-economic cohesion and sustainable patterns of development are unlikely to be resolved.     

First steps: towards purposeful activities in scenario thinking and future studies

In this paper, we contribute to the understanding of the field of scenario development and future studies, which has been a key debate in Futures over the past three of four years. Our contribution is less on the philosophical issues surrounding future studies, but more on the hurdles faced by those interested in practising in the area of scenario planning and future studies. The issues presented and discussed in this article arise from a number of action learning research projects that we have conducted with small and medium sized enterprises (SMEs) in Scotland, who have embraced scenario development for the first time as part of their strategic management and learning process.Our contribution is targeted at identifying and understanding the hurdles to be overcome when (such) organisations consider adopting scenario development or future studies. The contribution is designed to first, help those in the field of scenario development and future studies be mindful of these hurdles and to build a trusting relationship between the scenario practioner and the client, and secondly, help those managers willing to engage in such activities to better understand the purpose of such work.First we identify three key hurdles: (a) organisational culture (i.e. tacit assumptions on scenario development and future studies); (b) “client” state of mind; (c) fear of engaging with the outside/fear of the future. We argue that these hurdles are a serious threat to the relevance and effectiveness of futures work. We argue that these hurdles need to be better understood as a basis for improving the impact and contribution that scenario development and future studies can make.Later in this article we propose a framework to help understand the purpose of scenario development or future studies work. This framework can be used at the outset of any engagement or study, to help the “client” to identify the purpose of such work and to understand its role and scope. We argue that this framework contributes to more purposeful, relevant and actionable scenario development and future studies in the future.Unless you changed something in the minds of managers, a scenario project had failed (Harvard Bus. Rev. 63(6) (1985) 139). Going one-step further, we would argue that unless something tangible happens as the result of the scenario development and future studies work, we have wasted our time.     

Improving decision-making with scenario planning

Decision makers struggle with four important contributors to decision failure, namely, 1) bounded rationality, 2) a tendency to consider only external variables, 3) the stickiness and friction of information and knowledge, and 4) mental models that include decision premises or policies. Whether independent or combined, these decision problems can form the ultimate in decision error—folly. The four problems in decision-making are reviewed in detail and scenario planning is posited as a tool for preventing the impact of each, ultimately with an aim of avoiding folly.     

Structure in creativity: An exploratory study to analyse the effects of structuring tools on scenario workshop results

Scenario projects increasingly combine quantitative models with qualitative, participatory products in order to make scenarios more coherent, relevant, credible and creative. A major advantage of adding participatory, qualitative scenarios is their ability to produce creative, innovative, non-linear products. Integrating participatory results with quantitative models, however, can lower their credibility of both products when they are not consistent. The low level of structure in most participatory output limits possibilities for linking them to quantitative models. More structure could be introduced, but this might hamper the creativity of the workshop results: outcomes (process) and outputs (storylines). This paper tests a new method to analyse the creativity of scenario storylines in order to analyse the effects of structuring tools on the creativity of workshop results. Both the perceptions of participants and the resulting storylines of nine case studies across Europe are used in the analysis. Results show that the use of structuring tools can have a negative effect on the creativity of the workshop, but the influence seems to vary between the different tools. The study shows the benefit of using indicators for the scenario quality criteria. More research is needed to develop indicators for other scenario quality criteria, to improve those developed here and to study the impact of structuring tools with a larger data set.     

The design approach to socio-economic modelling

The exploration of alternative futures is an important part of socio-economic analysis. This paper describes one approach to socio-economic modelling that is intended to support this exploration by scenario analysis. The approach involves the representation of a socio-economic system by a simulation framework which has no imposed optimization. Alternative futures are explored by changing the control variables governing the simulation framework which is a loosely coupled set of physical transformation processes, each using existing design information to represent a segment of the economy. The variables that control the processes are set by the user or, alternatively, by the user in conjunction with a model of decision processes. In this way, the user is an integral part of the system and a source of novelty. A prototype representation of the Canadian socio-economic system serves to illustrate this approach and its use.     

The impact of socio-economic accounting statements on the investment decision: An empirical study

In this experiment, alternative disclosures of socio-economic accounting information, namely the abatement costs of pollution, were investigated as accounting techniques which may influence the investment decision of potential users. The theoretical rationale stemming from the linguistic relativity paradigm in accounting was that in general the accounting techniques may tend to facilitate or render more difficult various (nonlinguistic) managerial behaviors on the part of the users, and that in this particular context the investment decision effects from different professional groups using alternative socio-economic information will be different. The findings attest to the general relevance of socio-economic accounting information for the bankers under any investment strategy, and for the accountants only under an investment strategy focusing on capital gains.     

Functions of scenarios in transition processes

Given the interplaying tendencies of economic decline, social instability, and environmental depletion, any transition towards sustainable development faces a challenging task. To successfully cope with this complexity requires transition management. Integrated approaches for supporting sustainability transitions have been elaborated in the last years. Future studies and scenario construction are regarded as essential components in these approaches. However, the related studies in this field have focused either on a specific type of transition process, or on decision support in a different contextual process, or on a specific function of scenarios. Thus, an evaluation of the wide range of viewpoints on the functions of scenarios with respect to the requirements for transition management is still missing. In this paper, we systematically elaborate upon the functions for transition management that scenarios can fulfil. The developed concept is applied to five empirical scenario studies supporting transition processes on the national, regional and local level in Switzerland. The paper contributes to the development of a functional methodology of transition support, providing initial guidelines for answering the question of which method is appropriate for what type and phase of a transition process.     

Systemic scenarios of nanotechnology: Sustainable governance of emerging technologies

The economic and social promises of emerging technologies, especially nanotechnology, are assumed to be outstanding due to radical innovative features of materials, products and services. However, preliminary studies indicate that these very same features, e.g. high chemical reactivity, could entail adverse impacts on human health and the environment. Calls for appropriate regulation and societal formation of nanotechnology developments have been made, resulting in the concept of sustainable nanotechnology governance. The required anticipatory knowledge supporting these efforts seems so far to lack a sound methodological basis as well as an integrated perspective on nanotechnological applications. We present a scenario study on possible future developments of nanotechnology in Switzerland (reference year 2020). The study employed a formalized and functional scenario methodology, featuring system analysis, consistency analysis and transdisciplinary collaboration. The results indicate five different future constellations of contextual aspects, such as public awareness, profit potential and legal regulations, which are assumed to consistently correspond to five distinct market situations for nanotechnological applications. Going beyond the specific nanotechnology scenarios, the article argues for a rigorous scenario methodology as a valuable tool for the sustainable governance of emerging technologies.     

Future of Turkey-EU relations: a civilisational discourse

Should or can Turkey join the European Union (EU)? This paper argues that there are three alternative scenarios of the EU decision to grant membership to Turkey: ‘privileged relationship offer,’ ‘wait and see attitude,’ and ‘start of full membership negotiations.’ It then gauges each alternative path, and argues that the most likely scenario is a decision to start the negotiations, followed by the scenario of ‘wait and see.’ The EU decision will be conditioned by its future vision of global governance and the role foreseen for Turkey inside, outside or at the margin of it. The paper concludes that the EU decision will have significant implications for the future of relations between Europe and Turkey on the one hand, and Europe and the Islamic world on the other.     

采用PPP模式建设公租房是否可行？——基于效用理论视角的比较研究

从利益相关者的效用和福利的角度,构建PPP模式和公共管理模式建设公租房的比较模型,分别分析在信息对称情形下和信息不对称情形下的比较结果.研究发现:在信息对称情形下,PPP模式建设公租房所产生的福利永远不可能高于公共管理模式;然而更加贴近实际的是信息不对称情形,此情形下,政府的资金约束愈大,项目的风险愈大,采用PPP模式愈优.