The assessment of the expected value of information in the binary decision model

The expected value of information represents the maximum amount the decision maker should spend on inquiry before making a decision. This amount depends upon the accuracy of the information. In many cases of inquiry, prior objective knowledge of the accuracy is not available. This paper presents and compares two methods of subjectively assessing the value of imperfect information in the binary decision model. In the first method, the decision maker provides a likelihood function for the inquiry and hence the probabilities of error. The second method is the preposterior approach, in which the decision maker provides the prior distribution for the posterior probability.     

Decision making with imprecise probabilistic information

We develop an axiomatic approach to decision under uncertainty that explicitly takes into account the information available to the decision maker. The information is described by a set of priors and a reference prior. We define a notion of imprecision for this informational setting and show that a decision maker who is averse to information imprecision maximizes the minimum expected utility computed with respect to a subset of the set of initially given priors. The extent to which this set is reduced can be seen as a measure of imprecision aversion. This approach thus allows a lot of flexibility in modelling the decision maker attitude towards imprecision. In contrast, applying Gilboa and Schmeidler [J. Math. Econ. 18 (1989) 141] maxmin criterion to the initial set of priors amounts to assuming extreme pessimism.     

Unawareness, priors and posteriors

This note contains first thoughts on awareness of unawareness in a simple dynamic context where a decision situation is repeated over time. The main consequence of increasing awareness is that the model the decision maker uses, and the prior which it contains, becomes richer over time. The decision maker is prepared to this change, and we show that if a projection-consistency axiom is satisfied unawareness does not affect the value of her estimate of a payoff-relevant conditional probability (although it may weaken confidence in such estimate). Probability-zero events however, pose a challenge to this axiom, and if that fails, even estimate values will be different if the decision maker takes unawareness into account. In examining evolution of knowledge about relevant variable through time, we distinguish between transition from uncertainty to certainty and from unawareness to certainty directly, and argue that new knowledge may cause posteriors to jump more if it is also new awareness. Some preliminary considerations on convergence of estimates are included.      

基于投影模型的不确定语言型多属性决策方法及应用

研究了不确定语言型多属性决策评价结果与决策者对方案的偏好信息之间存在偏差的问题,提出了基于投影模型的不确定多属性决策方法。该方法通过建立与区间型语言标度对应的术语指标矩阵,及方案综合属性值与决策者主观偏好值之间的投影模型,确定属性的权重,然后运用加权法得到方案的综合属性值,利用已有的可能度矩阵排序公式得到决策方案的排序。最后,通过算例对该方法的实用性和有效性进行了说明。     

A survey and critique of multiobjective power plant siting decision rules

This paper reviews the use of multiobjective decision rules for solving power plant siting problems. After a discussion of exclusionary site screening methods for bounding the decision space, classes of multiobjective and goal programming desicion rules are discussedin the context of final site selection. Advances and limitations of these methods are highlighted. Although multiobjective decision rules have seen numerous applications to power plant siting in the literature, few electric utility companies have used these methods in practice. A review of the use of multiobjective methods in actual power plant siting decisions is also presented, and reasons for the paucity of real-world applications are suggested.     

A representation of decision by analogy

We give a representation of analogical reasoning in choice under uncertainty. A decision maker is faced with two decision problems, a familiar and a novel one. It is shown that, under assumptions that capture the salience of alignable differences in choice, the decision maker can be construed as choosing between acts in the novel decision problem as if drawing all likelihood information from a multi-valued correspondence between states of the world in the familiar domain and states of the world in the novel domain. The latter is interpreted as an analogy between the two decision problems, and the fuzziness of the analogy is related to revealed ambiguity in the novel decision problem.     

Critical essay on the methodology of multiobjective analysis

This paper presents a discussion of methodological issues in multiobjective analysis, encompassing various approaches to multiobjective optimization and decision making. The main thesis is that while there are already many methods for multiobjective analysis, this field would gain from further methodological reflection.     

Timing of information in agency problems with hidden actions

This paper endogenizes in a standard hidden action model the point in time when a risk neutral and wealth constrained agent and the principal observe the realization of an additional signal: before the agent’s effort choice (ex ante information) or after (ex post information). In a decision problem, ex ante information does (weakly) better than ex post information because the decision maker can tailor efforts to the information. We show that this is not the case for incentive problems: a negative incentive effect arises under ex ante information that prevails even though the principal tailors the agent’s effort to the information.     

Strategic real options under asymmetric information

This paper studies the effect of private information on the capital allocation decisions of firms who operate under imperfect competition. I analyze two interactive firms, one with private information and the other without, who must decide when to undertake an irreversible and uncertain investment decision. Traditional non-strategic models of irreversible investment under uncertainty involve a single decision maker and result in an optimal period of delay before the investment is undertaken. In a strategic setting, firms must balance their desire to delay against competitive advantages from early investment. I find that an equilibrium may not exist within the standard continuous framework when the private information is over revenues. Moreover, when an equilibrium does exist the competitive pressures from the uninformed firm are weak. This is in contrast to existing models with asymmetric information over costs, where an equilibrium always exists and the competitive pressures remain strong (Hsu and Lambrecht, 2007). This work shows that the investment timing decision, and thus the value of the private information, is highly sensitive to the nature of incomplete information.     

Revenue forecasting, budget setting and risk

The budget-making process can be viewed as a problem of decision making under uncertainty since revenues are unknown at the time the budget is written. Revenue forecasts become information for describing the uncertainty in revenue receipts, thereby allowing the decision maker to trade off desire for a larger budget against the uncertainty in revenues. A chance constraint decision model is used to model this process. Application of the model to evaluate alternative forecasting techniques is then demonstrated for several revenue sources used in Kansas City, Missouri.     

Organizational Diseconomies of scale

Private information creates a cost of operating a hierarchy, which becomes larger as the hierarchical distance between the information source and the decision maker increases. When information about a firm's capabilities is dispersed among the individuals in the firm, production is inefficient even though everyone behaves rationally. Because hierarchies need rents in order to function, a firm with a long hierarchy may not be viable in a competitive industry.     

A systematic approach for ranking football players within an integrated DEA‐OWA framework

The ranking of players has always been an important input for key decisions in the football industry. This paper introduces a systematic methodology for ranking football players through objective performance factors within a framework that integrates data envelopment analysis and ordered weighted averaging operators. Players from European Premier League Football clubs are selected and ranked under a decision setting that involves the players' desirable and undesirable performance factors alongside the attitude of the decision maker. The robustness of the proposed methodology is evaluated using different levels of optimism of the decision maker.     

冒风险的决策者：聪明乎？糊涂乎？

决策是对行为的选择——选择做什么或者不做什么,是人类的高级认知活动之一。风险决策特指决策者在对未来情况不完全确定、但是确知各种决策后果以及各种后果出现概率情况下的决策。人们如何进行风险决策,一直是经济学和心理学非常关心的未解之谜。本文尝试从有限理性的角度,分析“齐当别”抉择模型是如何理解、解释人们的风险决策过程,并讨论了“最终的决策只能在单一维度上进行”这一决策规则在现实生活中的旨趣和寓意。     

The Paternalistic Bias of Expert Advice

Using a theoretical model of noisy expert advice, I show that language inflation can be a rational response to the vagueness of language. Experts will tend to overstate their positions to a like‐minded decision maker (DM) and this constitutes a Pareto improvement over sending a sincere message. When the message space is bounded, overstatement may interfere with the DM's ability to aggregate the experts' information, because communication is less precise when the same message is sent for many states of the world. Despite this, I show that experts are willing to send either the most extreme message to the DM, or a partially overstated message, because by doing so the expert can decrease the likelihood the DM makes a suboptimal decision due to his subjective interpretation of the advice. Because the expert inflates his message toward the policy he believes the DM would be better off choosing, rather than sincerely revealing his information, I refer to this behavior as a paternalistic bias.     

Loading strategies for a freight transport system

Dynamic programming and graph theory are utilized to obtain a solution and portray the policies to be followed at each of a sequence of freight depots. The system involves alternate stages of decision and uncertainty. The objective is to select the size of truck at each depot which will minimize the transport costs, where the events at the future depots are a stochastic variable. The methodology provides a solution, portrayed on a graph, which shows the decision maker what action to take at any decision point and any load size.     

投资者决策行为与信息披露

本文认为对会计师而言,理解投资者如何作出决策(实证理论)以及应如何作出决策(规范理论)是相当重要的。通过对投资者决策行为的研究,可能有助于提高财务信息准确地描述真实经济事项的能力;有助于理解财务会计信息的数量、类型和形式如何影响投资者的判断或预测;有助于理解决策者准确地对其认知的环境作出反应的能力;有助于理解投资者如何解决决策的复杂性,以及不同的决策风格对信息利用方式的影响。     

Shortlisting procedure with a limited capacity

A decision maker, who is overwhelmed by the number of available alternatives, limits her consideration. We investigate a model where a decision maker’s capacity determines whether she is overwhelmed: She considers all the available alternatives if their number does not exceed her capacity; otherwise, she applies a shortlisting procedure to reduce the number of alternatives to within her capacity. We show how to deduce the decision maker’s capacity, her preference and the alternatives that she considers from the observed behavior. Furthermore, we provide the necessary and sufficient conditions for a consideration function to be derived by the shortlisting procedure with a limited capacity.     

论虚假会计信息导致审计模式的转变

随着经济的快速发展,财务管理工作也越来越重要,尤其是会计信息,越来越被决策者、投资者、债权人等会计信息使用者所重视,它成为政府部门进行宏观决策的重要依据。所以,要采取措施加强政府的监管力度,完善内控制度,强化高层管理人员责任,提高会计信息质量。     

A theory of iterative choice in lists

In a list, alternatives appear according to an order and the decision maker follows this order to evaluate alternatives. He records the first alternative as the initial survivor and then at every stage, he compares the current survivor with the next alternative in the list to determine whether the next alternative replaces that to become the new survivor. When the entire list is exhausted in this manner, the agent chooses the survivor in the last stage. We call this procedure “iterative” and provide an axiomatic characterization for it when the order in every list is observable. Then, we also study characterizations of the iterative procedure that is prone to the well-known primacy and recency effects. Finally, we analyze situations where the order of alternatives is unknown to an outside observer and provide a characterization result that enables such an outsider with limited information to understand whether the decision maker can indeed be an iterative list chooser for some order.