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A conference paper about auditing and accounting is presented. It discusses the definition of critical synthesis which is an antonym for analysis and how the author will analyze research done on auditing practices and accounting. It examines other papers concerning auditing procedures and accounting methods including the one by Neil Churchill.

Several behavioral scientists have contributed to special issues of the "Decision Science" journal. K. MacCrimmon and J. Siu tackled the significant problem of modeling and measuring and individual decision maker's inevitable trade-offs. The authors find that the choice mode consistently exceeds the equivalence mode in its predictive accuracy. R. Duncan's paper examined possible determinants of the structure of decision units within organization. A. Delbecq studied contextual variables affecting decision making in program planning. Lastly, V. Vroom and A. Jago wrote a paper about decision making as a social process.

Summary A n experimental study was conducted to evaluate a training course in problem-solving and decision-making given to three levels of management at a large southeastern paper mill. The course was conducted early in 1963 by an instructor from a firm specializing in management development. Approximately fifty management personnel attended the course. The twenty-hour offering conducted during the afternoon and evening had as its objective to increase the speed and accuracy of problem-solving and decision-making by the course participants. Evaluation of the training program involved the utilization of three distinct methods of appraisal. A course-end questionnaire was used to obtain the reaction of trainees to the program. A controlled experiment was used to determine the effect of the training on learning. In addition, observations were made of trainee participation in the practical-work periods during the course to determine any relation between learning and amount and types of participation. The results of the course-end questionnaire indicated that trainees felt the course was worthwhile and the material learned could be used on the job. In the controlled experiment, the criteria of learning employed were performance on the Watson-Glaser Critical Thinking Appraisal and on problems similar to those used in the training program. The control group used in the experiment was made up of members of the top three levels of management at the West Virginia Pulp and Paper Company Mill at Charleston, South Carolina. The portion of the experiment to show the effect of the training on learning resulted in no significant improvement in scores on the test devices used. The observation of trainee participation during the practical-work periods of the training program added little to the overall results of the evaluation. It did substantiate some of the suggestions for improving the training; and it showed an improvement in the attitude of trainees on the last day of training over what it had been the first day. In view of the fact that the entire program lasted only twenty hours, it would probably have been presumptuous to expect a significant amount of improvement from the training. To realize improvement in learning and in performance on the job, it was recommended that the over-all program be continued. In this regard it was suggested that formal refresher training be given to the original participants at periodic intervals and that a longer program be conducted for subsequent participants. [ABSTRACT FROM AUTHOR]

The authors respond to comments by Professor Eugene Carter concerning their paper "A Simultaneous Equation Approach to Financial Planning." They state that while matrix inversions are utilized in solving linear simultaneous equations, their own model utilizes nonlinearities that prevent the use of a straight-forward matrix inversion technique. They suggest their own model does a more effective job of portraying financial decision making than other models. They comment on the accuracy of projections for Sears-Roebuck and mention a discussion about if the U.S. Securities and Exchange Commission should permit or require projections in equity prospecti, considering the method for making financial projections is well-developed.

Manuscript data and criteria for the October 1971 issue of the "Decision Sciences" are presented. Members of the editorial board are listed together with their affiliations. A table of content is also given. The editorial policy and objectives of "Decision Sciences," the official journal of the American Institute for Decision Sciences (AIDS), are discussed. AIDS is an organization committed to promoting the development and application of quantitative methodology to functional and behavioral problems or administration by providing a forum for the exchange of ideas, experience and information among those who teach in collegiate schools of business and among those who have a special interest in the development and use of quantitative methodologies. The message of the last article of Albert J. Simone as periodical editor is discussed. Simone formally turn over the editorship responsibility to Professor William S. Peters.

This article focuses on the interaction between planning-programming-budgeting (PPB) and public policy-making system. PPB is closely related to politics, being strictly constrained by politics, trying a little to change politics, and serving as one of the symptoms of the state of politics. But, after all, not every symptom is a useful starting point for analyzing a complex series of developments and the author, for one, doubt whether PPB is a necessary or useful jumping board into the faster-moving streams of politics. As public policy is a product of complex interactions between a large number of components, similar changes in the output can be achieved through many alternative variations in the components. This means that different combinations of a variety of improvements may be equally useful in achieving equivalent changes in the quality of policy making. This is a very helpful conclusion, because it permits us to pick out of a large repertoire of potentially effective improvements those which are more feasible under changing political and social conditions.

Mao & Helliwill have two very ambitious objectives: (1) to present a new theoretical model in the area of investment and financing decisions under uncertainty and (2) to evaluate critically the current practices and suggest the directions future theoretical and empirical research on investment decisions can take. These objectives are not attainable by any single paper and M & H's attempt is no exception. By other more conventional standards, however, M & H have written an interesting paper. [ABSTRACT FROM AUTHOR]

The article analyzes economist James Ohlson's paper "Analysis of the Usefulness of Accounting Data for the Portfolio Decision: A Decision-Theory Approach," in order to determine if he's making a model comparison or a model choice. Ohlson's thesis is that he used methods of comparing models, but the author demonstrates the inaccuracies in that thesis. The author tests Ohlson's findings and also considers the portfolio-choice problem and whether the findings are conditional upon the comparison of the forecasting models used.

The article comments on the paper "Comparative Values of Information Structures," by Theodore J. Mock, that appears in the December 1, 1969 issue of the "Journal of Accounting Research." The author states that developments during the 1960s have had a major impact on the design of information systems. He explains that advances in operations research have provided an increased capability for formalizing decision models, as well as an added ability to identify optimal operating conditions, relevant variables, and the sensitivity of the models to parameter variations.

This paper is based on the thesis that by studying financial theory and financial practice in relation to one another, we may find ways in which both can be improved. The paper will first present a theory of investment decision under uncertainty which incorporates the following ideas: (1) a firm should choose portfolios rather than projects, (2) investment and financing decisions must be made simultaneously if the optimal program is to be chosen, (3) the risk attributable to an investment should be measured by its contribution to the total risk of a firm viewed in a market context, (4) a firm should trade off risk and return at the market-established rate of substitution, and (5) investors view security returns in real terms rather than in monetary terms. The paper will then present the results of three case studies investigating the actual making of investment decisions. We shall examine the disparity between the theory and practice of investment decisions, and suggest some reasons why the sophisticated techniques developed by theorists are not fully implemented in practice. Finally, the paper will indicate some of the lines along which future research should be directed. [ABSTRACT FROM AUTHOR]

Financial decision-making involves two separate and distinct considerations: (1) forming probability beliefs about potential returns from various assets and (2) allocating financial resources among assets on the basis of these beliefs. This paper deals exclusively with the second consideration. No effort is made to determine how management forms probability beliefs about returns on investment opportunities; the emphasis of this paper is on the proper financial decisions to be made given such beliefs. [ABSTRACT FROM AUTHOR]

The article presents a discussion of the research paper by Donald Nester, "The Effect of Aggregating Accounting Reports on the Quality of the Lending Decision: An Empirical Investigation." The author criticizes Nester's methodology for establishing the levels of aggregation on several points associated with Nester's model. These points include the existence of questions concerning the integrity of the conventional account classifications, that there is insufficient data to allow calculations of the 11 ratios, that all footnote and supplemental information are held constant, and that there is a 10 percent materiality rule.

The article presents a discussion of the research paper related to the effect of aggregating accounting reports on the quality of the lending decision. According to the author, the results of this research paper do not necessarily imply that disaggregated statements should be widely distributed, but rather that disaggregated statements are of little more value than aggregated statements to the experts. The research paper provides default rate preferences of a random sample of banks, and the difference among means of the five task variables are tested using different levels of aggregation. The author remarks that psychic value may well result from disaggregated statements, but economic value does not necessarily come from detailed reports.

The article discusses the effects of accounting variations on decision making and the paper "An Experimental Design for Study of Effects of Accounting Variations in Decision Making" by R.E. Jensen. The statistical methodology and design used by Jensen in his research of the effects of alternative accounting reporting techniques in the selection of portfolios and their security evaluation is examined as is the data collection. The limitation of whether or not there was adequate control over the research environment and the probability level of the statistical tests is not known in Jensen's paper because he does not mention these issues.

The topic of behavioral objectives has recently received considerable attention in the academic community. This paper contains a comprehensive overview of issues and explores the relevance of using the behavioral objective framework for teaching quantitative methods (QM) to undergraduate business administration students. Included in the paper are (1) a discussion of the nature and meaning of behavioral objectives, (2) arguments for and against their use, (3) a rationale for their use in a QM course, and (4) a series of examples demonstrating the use of behavioral objectives in a quantitative course. The evidence—consisting of expert opinion from professionals who have successfully used behavioral objectives for teaching quantitative material, the logic of the arguments for behavioral objectives, consideration of arguments against objectives along with rebuttal to these arguments, and the available empirical studies—indicates that behavioral objectives do appear to offer considerable potential for improving QM teaching. The use of behavioral objectives is worthy of thoughtful consideration by QM teachers. [ABSTRACT FROM AUTHOR]

The article reports on the effect of the accounting period concept on management decisions with a discussion of the paper "The Accounting Period Concept and Its Effect on Management Decisions" by William J. Bruns. The report published by Bruns uses an experiment where students played a business game and demonstrated the relationship between the accounting period and management decisions. He acknowledges in his paper that using students for his experiment may have been a mistake. Also, his definition of accounting data is limited to quantitative information set forth in financial statements.

This paper deals with the problems of hotel overbooking and the scientific determination of hotel booking policies. The general hotel reservations system is described, and a Markovian sequential decision model is proposed for it. An application of the model is presented, based on an actual sample of hotel data. Because of the significance of the cancellation phenomena in the sample, the model prescribes a substantial amount of overbooking. The paper concludes with comments regarding the necessity for and course of future research in this area. [ABSTRACT FROM AUTHOR]

The article focuses on several papers providing information on the application of equipment to library operations. The paper "The Economics of Book Catalog Production: A Study Prepared for Stanford University Libraries and the Council on Library Resources," by R.M. Hayes and R.M. Shoffner was intended to assist Stanford University in the economic and procedural questions involved in deciding what form the catalog for a new undergraduate library should take. It is also expected to assist other libraries in making such a decision.

The article focuses on comments concerning a paper about productivity bargaining and work orientation. It states that the propositions in the prior paper can be summarized that workers have consistent priorities in the qualities they seek from their jobs and that their priorities are expressed and shown through critical occupational decisions the workers make. It suggests that through the determination of work orientation, industrial behavior can be predicted by establishing worker needs. It mentions that while workers are interested in higher earnings during contract negotiations, once negotiations are through they express more interest in intrinsic job satisfaction than earnings.

This paper discusses two different forms of identifying restrictions and compares them in a Monte Carlo framework. A similar analysis is performed to illuminate how the identification procedures affect problems of mis-specification. It is found that, using ordinary least squares as the estimating technique, the two types of identification perform much differently and thus they should not be confused. Similar results hold in the mis-specification case. [ABSTRACT FROM AUTHOR]

This paper combines learning curves with a PERT network to produce a dynamic PERT model. The dynamic model takes cognizance of the fact that many projects are of a repetitive nature and that the network may vary between runs of the project through the addition or deletion of activities attendant to producing variations of a basic model. Thus, on any given run, the activities comprising a network will exhibit varying degrees of repetitiveness. The proposed model treats the estimated completion times of activities comprising the network as a function of (1) the number of times the various activities have been repeated on prior runs of the project, and (2) the learning rate attendant to each activity. Thus, the estimated completion time for a run through the project changes as additional units are produced. A sixteen event PERT network is simulated (using the proposed dynamic model) through twenty runs of a project. The simulation is conducted under three situations; namely, with learning taking place on (1) only noncritical activities, (2) only critical activities, and (3) all activities. In all three cases the results are compared to the static PERT model. The implications of the proposed model for improved decision making are presented in the concluding remarks of the paper. [ABSTRACT FROM AUTHOR]

Merely more documents, more specialties, and more people who use or add to growing knowledge do not constitute an explosive situation: what is critical is whether or not the growth remains stable in the sense that cumulated knowledge relates to real life. Two developments which can be anticipated during the next few decades are computer-aided bibliographic control and computer aids to individual decision-making. The first will give us greater options for tracing and detecting aggregations of bibliographic items which `belong together" through a network of interrelated (e.g., biographic and bibliographic) elements. The second will enrich our capabilities for posing and solving real-life problems. Underlying the development of technologies and their use in well-engineered information systems such as these two is an emerging new scholarly discipline. This paper outlines some of the concepts, methods, and problems in this field. Priority is given to evaluation and synthesis above access. The main idea behind the proposed logical structuring of this field is that the "growing literature" organizes knowledge analogously to the way a learner, by creating models of his relevant environment, is able to take increasingly effective actions. [ABSTRACT FROM AUTHOR]

This article focuses on issues regarding corporate planning of an insurance holding company. The first part of this paper suggested that corporate planning concerns itself with an organization-wide attempt to reduce risk by providing information for management decisions. The trend by large numbers of insurance companies to form holding companies was noted and described. The second portion of the paper was substantially a case history of a corporate planning activity in a new holding company.

Management theorists and practitioners have developed various rationales for the adoption of participative management. In recent years empirical evidence has pointed to the increasing importance of the lateral dimension in the managerial role. The growing emphasis on a manager's lateral interactions provides new justification for the use of participative management. This article examines the relationship between participation and lateral relations and establishes a new rationale for the adoption of participative management. Participative management has been described variously as "a subtle means of having employees think they are a more important part of the organization" or as "group decision-making." The exact dimensions of this concept are not of major importance for this paper; but, for purposes of clarity, participative management is defined as the participation of employees in the managerial role. This includes decision-making, planning, controlling, and any of the other management functions. A possible side benefit of a more judicious use of the participative style of management is the reduction of time spent interacting horizontally in the organization. The participative approach can also get the subordinate involved in some aspects of lateral relations.

In this article the author comments on the research paper related to the prediction of business failures using accounting data by Jarrod W. Wilcox. The author remarks that in evaluating the present work, one could discuss the model at the conceptual level based on strictly paired observations and tests in which a failed firm is paired with a nonfailed firm with similar total assets from the same industry. Perhaps more important, the strict pairing in the tests means that classification errors also occur only in pairs in Wilcox's tests. According to the author, any alternative prediction method based on more input data and more calculation should at least be clearly better than these success rates, and should warrant the extra cost involved.

In this article the author replies to a discussion of his research papers related to the effect of aggregating accounting reports on the quality of the lending decision. The author feels the issue of creating distinguished aggregation levels would have been resolved if the critics had read his paragraph indicating that the most detailed data were obtained from the financial information contained in the reports, while the data contained in the most aggregated form were those needed to compute the financial ratios used by bankers. The author comments on the critics' apparent preoccupation with rules that caused them to overlook the point about familiarity with the financial information contained in the reports and with the financial needs for computing the ratios. The author states that the critics' quarrel with asking for a preliminary instead of a final credit granting decision is not founded on any logical reasoning.

The subject of this paper is corporate decision making under perfect capital market conditions. The question raised is: If investors act as Markowitz portfolio theory suggests, and if capital market conditions as developed by Sharpe and Lintner exist, what implications follow for the corporate manager making decisions within the firm? This question is addressed for a particular type of corporate decision: the refunding decision. The approach taken, however, is generalized and lends itself to analysis of other firm decisions, particularly those which concern the choice of allocating funds to mutually exclusive uses. [ABSTRACT FROM AUTHOR]

In this paper the Tri Star project is reexamined in terms of a capital-budgeting framework. The objective of the analysis is two-fold. First, it serves to illustrate how standard economic and financial theory can be brought to bear on the solution to real-world business problems. Second, it demonstrates the contribution financial theory can make towards rational decision-making in the public sector. From the Congressional hearings one gathers that the loan-guarantee legislation was passed in the belief that the Tri Star program was commercially viable, an impression Lockheed had tried hard to convey with its own break even projections. Our analysis suggests, however, that the inclusion of the opportunity cost of funds among the total costs of the Tri Star tends to raise the actual break-even sales for the program to a level almost twice as high as the estimates submitted by Lockheed to Congress. It is clear, then, that Congress made its decision in this case on the basis of highly misleading information. [ABSTRACT FROM AUTHOR]

The article reports on research which examined the relationship between information structures, decision making, and learning patterns of business enterprises. A set of controlled laboratory experiments were conducted in 1968 with the objective of generating empirical evidence as to the relation between information, information value, and decision. The empirical value of timely information was significantly greater than the expected theoretical value calculated according to the principles of information economics. Experts say a major problem in developing a theory of human problem solving is that there are different effects resulting from similar informational input streams due to what can be termed "structural variables" in the mental organization of the decision maker.

The article presents comments of the author on the paper "The Return to Straight-Line Depreciation: An Analysis of a Change in Accounting Method," by T. Ross Archibald that was published in a 1967 issue of the periodical "Journal of Accounting Research." In his paper Archibald discusses the decisions of some firms to switch back from accelerated to straight-line depreciation. The author states that Archibald's research divides neatly into three parts timing of the switch-backs, relationships of the switch-back decisions and the decisions about accounting for the investment credit, and the relationships of the switchback decision and disclosure.

The purpose of this paper is to acquaint the reader with psychology's recent endeavors to answer this general question. Along the way we shall touch on a number of related topics, including studies of the accuracy and reliability of judgment; techniques for modeling the judgment process and making intuition explicit; biases in judgments of probability, variability, and correlation; experimental studies of risk-taking behavior; and discussion of the relative merits of scientific versus intuitive approaches to making judgments and decisions. Wherever possible, implications of this work for investment decision making will be noted. If, as we proceed, we expose some warts, prejudices, and twitches, it is done in the belief that a full understanding of human limitations will ultimately benefit the decision maker more than will naive faith in the infallibility of his intellect. [ABSTRACT FROM AUTHOR]

It is a common place to describe the capacity of a person to command marketed goods and services generally as wealth. In a monetary economy the significant measure of wealth is the money's worth, or sum of the market prices if sold, of a person's possessions. The things one legally possesses may take varied forms; we say that wealth has been invested in these forms. The forms in which one's wealth is held are a consequence of choice, whether choice is exercised by analysis and deliberation or by simple inertia. The evidence of choosing lies in the investments we make. These are observable, and they are often capable of being understood, even by an observer, in terms of the information available to, and the expectations and preferences of, investors individually. The purpose of this paper is to demonstrate the relevance and coherence of the informative, appraisive and evaluative processes of investment choice. The resulting system of ideas incorporates in embryo all the basic features of investment decisionmaking in a real-world context. [ABSTRACT FROM AUTHOR]

The article comments on the study "Analysis of the Usefulness of Accounting Data for the Portfolio Decision: A Decision-Theory Approach," by James Ohlson in order to determine whether accounting information in corporate reports is useful to investors. The author analyzes Ohlson's experiment involving an individual risk-averse investor selecting an optimal portfolio who wants to make forecasts about stock prices, and tests the Bayesian models used. The author points out several weaknesses in Ohlson's theory involving the utility function, prior values of parameters, and the prediction formulas used.

In this paper a normative model of social processes for decision making was presented. This model represented a slightly elaborated and refined version of a model presented in Vroom and Yetton. We share the previous authors' view that such models are far from perfect but can serve a useful function in stimulating research which, in time, will be reflected in better models. The latter half of this paper was devoted to questions related to how managers do select decision processes—to the factors which influence the degree to which they share their decision-making power with their subordinates. In pursuing these questions, we also relied heavily on the previous work of Vroom and Yetton by using a set of standardized cases selected in accordance with an experimental design. Each case depicted a leader faced with a problem to solve, and subjects were asked to assume his role and to select from a specified list of decision processes the one they would employ. The major difference from Vroom and Yetton was in the nature of the experimental design used in the construction of the "problem set." Whereas Vroom and Yetton's design utilized 30 "group problems" and five decision processes, the design used here provided for seven decision processes and 24 group and 24 individual problems. This design permitted the additional exploration of relationships between behavior on each kind of problem, and of the consistency of the behavior on the latter with the normative model. [ABSTRACT FROM AUTHOR]

This paper refers to the brand-preference parameters of a previously accepted empirical model, and axiomatically generates several basic propositions and their proofs, which define the retail store's most profitable short-run blend of product brands. [ABSTRACT FROM AUTHOR]

The crucial issues in the administration of higher education embody the very purpose, function, and concept of each institution. The institution's administrative policies are based on the combined philosophy of many conflicting interest groups such as taxpayers, donors, administrators, faculty, students, staff, and users of university services. A function performed by the university which is receiving increasing attention and outside pressure is the formulation of admissions policy for newly entering students. This paper investigates problems involved in the admissions planning and presents a goal programming model as an optimization tool for the problem. [ABSTRACT FROM AUTHOR]

This paper describes how the core portion of the undergraduate business program at Indiana University was revised to facilitate integration of basic functionally oriented decision making skills and thus help students gain a deeper understanding of the interdependence of business decisions. It relates, in essence, why and how a single computer-oriented case study which demanded a solution to a large-scale, unified finance-marketing-production problem was used at Indiana University, mentions how we plan to accomplish further integration of functional material, and provides some insight into student reaction to what was, in fact, a massive project from both student and administrative points of view. [ABSTRACT FROM AUTHOR]

This paper is concerned with the solution of linear and linear goal programming problems in which the values of the right-hand side parameters are not fixed constants. Specifically, we are concerned with linear optimization problems in which the right-hand sides of the constraining equations are free to vary subject to a set of linear constraining equations. By formulating a relaxed linear program wherein the right-hand sides are treated as variables, we show how it is possible to solve one larger linear program that yields as a solution not only the optimal values for the decision variables, but also the optimal values for the right-hand sides. [ABSTRACT FROM AUTHOR]

A decision-making orientation to systems design has been suggested to overcome some of the current deficiencies of computer-based information systems. This paper derives several hypotheses from a decision-making framework proposed by Robert Anthony. These hypotheses are tested with empirical data from a sample of twenty major computer-based information systems drawn from seven Bay Area manufacturing firms. The results indicate that present computer-based information systems follow the descriptive aspects of the Anthony framework, but have had little effect on top management. There is little evidence of common guidelines for systems design which are accepted by the different companies. The data also indicate that users have a strong negative reaction to large numbers of computer-produced reports. The implications of the results for systems design are discussed. [ABSTRACT FROM AUTHOR]

The article focuses on the task and prestige of supervisors on industries in Great Britain. There have been major changes in the tasks and prestige of the supervisor in industry in the past twenty years. These changes can be attributed to a number of different processes resulting from different causes. These processes include advancing technology and automation, increasing trade unionism of the shop floor, changes in top management philosophy, increasing standards of education of manual workers, increasing supply of college graduates into industry etc. This paper contains the results of empirical studies in a number of industries which were used to develop a method of identifying specific processes of change rather than vague directions of change. This will provide a more realistic and pragmatic approach to the problem than has been achieved previously. The material used in this paper which is presented is drawn from intensive interview programs of supervisory staff which were conducted in five factories in the period October 1969 to January 1972. The results of the study indicate that the supervisors were not involved in areas such as decision-making and planning which they had traditionally regarded as part of their job.

Manpower planning is no novelty in the Royal Navy. It has been accepted as a necessity for many years. Its roots lie far back in history. It began as soon as there was a need - as soon as naval careers replaced a policy of 'hire and fire'. The transition to a career Navy began towards the end of the 17th century and was largely completed by about 1850. The need to plan increased yet more after 1850 as the technical complexity of the Navy grew, and the need was further reinforced after the 1939-45 War when new social and economic conditions brought a real risk that the Navy would not be able to recruit all the men needed. The ability to plan depended on the development of an appropriate organization, and the availability of appropriate expertise and resources. In the early days, officer-planning could be done reasonably adequately with a few Navy Lists, a quill-pen and a mathematical mind. This process is still good enough for a few very small groups of naval personnel, but for the Navy as a whole, all the techniques of social and management sciences need to be brought to bear, and geared into an organization for effective decision-making. This paper attempts to describe the main features of the organization for planning and decision-making as it exists today. Readers who are familiar with the organization will note omissions. For example, except in this paragraph, there is no mention of the Defence Council or the Admiralty Board, or of the Second Sea Lord who is responsible for all naval personnel matters. The fact that there are levels of responsibility above and alongside those described - including, of course. Parliament - must be taken as read. The paper describes only the essential core of organization. [ABSTRACT FROM AUTHOR]

The analysis of expenditure on research and development within the individual enterprise is a particularly difficult operation. There are three distinct but related problems. The first is the proportion of the firm's total budget which should be allocated to pure research and development and the division between them. The second is the choice between particular projects in any given period. A third problem, an implicit subsidiary of the second, is to decide on the cut-off point for any project, that is, the point at which it should be eliminated from the research programme. The difficulties arise for a number of reasons which are inherent in the conditions surrounding the decisions. It is unknown how the amount of innovation is associated with the amount of expenditure, whether for example there are diseconomies of scale in research. For individual projects the prospective yields are unknown and the costs open-ended. The problems are made the more difficult because of conceptual hazards in seeking to distinguish between pure and applied research and between research and development. This paper is largely concerned with one aspect of the whole question, viz. with the means of balancing the demand for funds within the firm for research and development with the supply of such funds. Methods are suggested for the allocation of funds between projects (i) on the assumption that managers are able to quantify the returns from research; (ii) on the assumption that they cannot or prefer not to quantify but will give a clear ordinal ranking. [ABSTRACT FROM AUTHOR]

In a recent article Baruch Lev analyzed 29 peak-demand forecasts (consisting of 1917 monthly forecasts) made by Commonwealth Edison Company between 1955 and 1966. The conclusions made by Lev from analysis of these actual forecasts bear a close resemblance to the kinds of conclusions that we derived from an application of time series analysis to historical data to produce forecasts. It is the purpose of this paper to show how the conclusions which Lev made about forecast errors would also be true of the errors resulting from forecasts derived solely from analysis of historical data. Although in no way definitive, such a demonstration of consistency between actual forecasts made by businessmen and statistical forecasts made only from historical data yields further evidence of the practical applicability of time series analysis to forecasting problems in real life. In particular Lev concluded that the major factor affecting the distribution of forecast errors was the month of the forecast and that the "… interval between prediction and realization has only a slight effect on the prediction errors." Mr. Lev's analysis of these observations showed that the expected value of forecast errors was about one quarter of one percent and independent of the time interval of the forecast. In addition he pointed out that the variance of the log forecast errors increased slightly with the prediction interval but was affected more directly by the month which was forecasted. [ABSTRACT FROM AUTHOR]

In hypothesis testing, the level of significance, α, often performs a screening as well as an evaluating function. Results which are not "significant" at some preset value of α are simply not reported. Unfortunately, this value of α is usually arbitrarily set at .05 or .01 and bears no relation to the needs of potential users of the study. This paper suggests an approach to making the selection of α more responsive to these potential applications. [ABSTRACT FROM AUTHOR]

This paper analyzes three simple search models, in which a buyer with full knowledge of the distribution of market prices searches for a low price. He continues his search until the cost of further search exceeds the expected savings resulting from the further search. The implications of these models are also discussed. [ABSTRACT FROM AUTHOR]

This paper proposes and tests a decision-making process of entrepreneurs. History of many industries shows that rapid changes in technology, accompanied by large investments and accumulations of capital occur. One production method is replaced by another as newer cost reducing techniques become available. It seems that the fate of any particular production technique can be better understood in the context of such dynamic factors as changes in technical knowledge, factor prices, demand composition together with decision-making process of the entrepreneurs. A recursive programming technique is presented that reflects the fact that entrepreneurial decisions are conditioned by interaction between technical, economic, and non-economic factors. Recursive programming technique is a recent addition to the inventory of decision-making analysis. This method is applied to the Japanese Iron and Steel Industry. Results suggest that this technique is a very promising tool of decision-making analysis. [ABSTRACT FROM AUTHOR]

In this paper linear production functions with highly correlated independent variables are estimated. Because many production processes require the use of inputs in fixed proportions, multicolinearity is usually a serious problem. This is usually the case when one attempts to estimate a linear or Cobb-Douglass (in log linear form ) production function. Estimates of the marginal products of a linear production function are obtained by employing the first order conditions of the output maximizing solution given a cost constraint. Parameter estimates are determined for the case where the input costs are constants. The general case, where the input prices are functions of utilization levels, is delineated. [ABSTRACT FROM AUTHOR]

In recent years, decision making based on systematic analysis has been greatly emphasized. Yet, decision analysis is often carried out without analyzing the limitations of certain quantitative techniques. This paper presents the concept, solution method, and application potential of goal programming which eliminates many limitations of conventional linear optimization models. [ABSTRACT FROM AUTHOR]

This paper investigates the optimality of making two insurance decisions independently in the expected utility framework, when the two risks under consideration are independent. It is shown that when the disutility function embodies constant risk aversion, independent decision-making is identical to optimal joint decision-making. When the disutility function has strictly decreasing risk aversion, joint decision-making is always not less conservative than independent decision-making, and the opposite holds when the disutility function has strictly increasing risk aversion. Stronger results are obtained for some particular disutility functions. Finally, some implications of these results for empirical research in utility and decision theory are considered. [ABSTRACT FROM AUTHOR]

The traditional "excess burden" analysis is the usual method of discussing inefficient tax devices.[1] Such analysis has not, however, been integrated with the voluntary theory of public finance, in which the individual is assumed not only to react to taxes but also to determine public expenditure through the use of his vote. This paper will discuss the voter's decision calculus when public expenditures are constitutionally or institutionally constrained to be financed by inefficient tax devices. We will attempt to show how and why considerations of excess burden and inefficiency enter the voter's choice calculus, and how these considerations affect both the quantity of public goods he will choose and the number of tax devices he will use to finance those goods. [ABSTRACT FROM AUTHOR]