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1 – 10 of over 118000Antonio Mastrogiorgio and Nicola Lattanzi
Many decision rules are rational but opaque, and many others are irrational but transparent. This paper aims to propose a theoretical framework to operationalize opacity in…
Abstract
Purpose
Many decision rules are rational but opaque, and many others are irrational but transparent. This paper aims to propose a theoretical framework to operationalize opacity in decision-making – the degree to which a decision rule is intelligible to the decision maker.
Design/methodology/approach
The authors operationalize opacity and discuss the implication of opaque decision-making in organizational settings through a typology, where decision rules can be rational or irrational and opaque or transparent.
Findings
The authors show that opacity is asymmetric as different organizational actors possess different degrees of knowledge about how the decision rules work. Organizational actors often opacify the decision rules to increase their power (based on asymmetric knowledge). Opacity also presents a significant impact on organizational accountability, as transparent organizations are more reputable.
Originality/value
This contribution represents the first theoretical and methodological articulation of opacity in decision-making, within a bounded and ecological rationality framework; it also sheds new light on the role of cognitive biases in organizational settings.
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Afschin Gandjour, Nadja Chernyak, Andrea Icks and Amiram Gafni
In Germany, the Institute for Quality and Efficiency in Health Care (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (IQWiG)) makes recommendations for…
Abstract
Purpose
In Germany, the Institute for Quality and Efficiency in Health Care (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (IQWiG)) makes recommendations for reimbursement prices of drugs based on an evaluation of the relationship between incremental costs and effects. In 2009, the German government (“Koalitionsvertrag”) announced its intention to evaluate the transparency and acceptability of IQWiG's work. The purpose of this paper is to conduct a survey of a sample of the German population: to check the acceptance of the IQWiG's decision rule compared to a decision rule used in countries such as England and Wales; and to test if the way the IQWiG's decision rule is presented affects its acceptance.
Design/methodology/approach
A questionnaire was developed eliciting acceptability of IQWiG's decision rule and a single cost-effectiveness threshold applying to all diseases (i.e. absolute rule (AR)). To check for a framing effect IQWiG's decision rule was presented in two ways. One version presented it, based on IQWiG's official publication, as a constant ratio between incremental costs and effects within a therapeutic area (proportional rule (PR), Version 1). The other version presented it in terms of a proportional relationship between costs and effects within a therapeutic area (PR, Version 2). χ 2 goodness of fit test and two-proportion z-test tested for differences between acceptance rates of decision rules.
Findings
A sample of 108 persons from the general public (average age: 41 years, 48 per cent male) filled out the questionnaire. Acceptance rates for AR, PR Version 1, and PR Version 2 were 33, 48, and 39 per cent, respectively. Direct comparisons show that acceptance of PR Version 1 was significantly higher than acceptance of AR (p=0.026) and that there was a clear trend towards higher acceptance of PR Version 1 compared to Version 2 (p=0.22). The difference between PR Version 2 and AR was not significant (p=0.32).
Research limitations/implications
In our study, different presentations of the IQWiG decision rule did not significantly alter its acceptance, although there was a clear trend towards accepting IQWiG's official version. Furthermore, the acceptance of the IQWiG's official version was significantly higher than AR. Because of the relevance of the research question we recommend additional research for confirmation and explanation of the choices made.
Originality/value
This is one of the few studies on the impact of framing on allocation preferences in health care.
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Based on a formalization of the 1981 constitutional negotiation in Canada, this article analyses the impact of procedural constraints on collective decisions. Four procedural…
Abstract
Based on a formalization of the 1981 constitutional negotiation in Canada, this article analyses the impact of procedural constraints on collective decisions. Four procedural constraints are considered: voting procedures, voting rules, decision rules, and the order of presentation of options to the vote. Sincere voting (voting according to a voter's preference scale), complete information, and free communication are assumed in the first part of the analysis. The assumption of sincere voting is relaxed in the second part where strategic voting is considered The analysis shows that (1) a collective decision is determined by some interaction of voters' preferences, procedural constraints, and voting strategies, and (2) procedural constraints can be ordered in terms of their relative impact on the collective decision (in decreasing order: decision rules, voting rules, order of presentation, voting procedures). In the conclusion, a general model of the determination of collective decisions is presented.
Tatjana V. Kazakova and Daniel Geiger
The way organizations cope with uncertainty in strategic decision making is prominently discussed. Concepts such as heuristics and simple rules are gaining increasing attention in…
Abstract
The way organizations cope with uncertainty in strategic decision making is prominently discussed. Concepts such as heuristics and simple rules are gaining increasing attention in strategic management research. However, despite their importance, little is known how heuristics and simple rules operate. Our qualitative study reveals that, first, strategic decisions consist of three basic elements: single rules, rule patterns, and emotional handling. Second, we find that firms develop generalizable rule patterns which follow a sequential order of inter-linked rules. Based on the findings we introduce the concept of organizational heuristics as inter-linked rule patterns drawing on organizational experience.
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Kirsten Rauwerda and Frank Jan De Graaf
In order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and…
Abstract
Purpose
In order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and medium-sized enterprises (SMEs) and what influences the shaping of these heuristics. In doing so, the authors detect possible fast-and-frugal heuristics in day-to-day decision-making of independent financial advisers who help owners of SMEs to acquire capital (e.g. loans, factoring, leasing and equity).
Design/methodology/approach
The authors inductively assessed the work of financial advisers of SMEs. Based on group discussions, the authors drew up a semi-structured interview-protocol with descriptive questions about how financial advisers come to a deal for their clients. The interviews of 19 professionals were analysed by relating them to the theory of fast-and-frugal heuristics.
Findings
Within their decision-making, advisers estimate the likelihood of acceptance by a few financial providers they know well in their personal network with a strong bias towards traditional banking products, although there are a large number of alternatives on the Dutch market. “Less is more” seems to be a relevant principle when defined as satisficing. Heuristics help advisers to deal with behavioural and economic limitations. Also, the authors have found that client interaction, previous working experience and the company the adviser is working for influences the shaping of the simple rules the adviser is using.
Research limitations/implications
The study shows how difficult it is to understand the ecological rationality of a certain group of professionals and to understand the “less is more” principle. Financial advisers to SMEs use cognitive shortcuts and simple rules to advise SME-owners, based on previous experiences, but it is difficult to determine whether that leads to the same or even better solutions for them and their clients than using probability theory and financial optimisation models. Within heuristics, satisficing seems to be a dominant mechanism. Here, heuristics help advisers in recognising possibilities by searching for similarities between a current financing case and previous experiences. The data suggests that if “less is more” is defined as satisficing for one or more stakeholders involved, the principle dominates the decision making of financial advisers of SME's.
Practical implications
The authors suggest the relevance of a behavioural approach to finance by assessing the day-to-day decisions of financial advisers of SMEs. Also, the authors suggest that financial advisers are guided by previous experiences, and they do not fully assess a wide range of options in their work but need shortcuts to fulfil the needs of their clients.
Originality/value
The study comes close to day-to-day decision-making in finance by assessing how professionals make decisions. The authors try to understand types of heuristics in relation with “ecological rationality” and the less is more principle. The authors assess financial advisers of SME-companies, a group that has gotten little research attention until now. The influence of client interaction and of the company the adviser is working for is remarkable in the shaping of the advisers' simple rules.
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Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and its way…
Abstract
Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and its way of using the law in specific circumstances, and shows the variations therein. Sums up that arbitration is much the better way to gok as it avoids delays and expenses, plus the vexation/frustration of normal litigation. Concludes that the US and Greek constitutions and common law tradition in England appear to allow involved parties to choose their own judge, who can thus be an arbitrator. Discusses e‐commerce and speculates on this for the future.
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Simone Guercini and Susan Maria Freeman
The paper addresses the following research question: how do decision-makers use heuristics in their international business (IB) environment? Whereas, the literature has focused on…
Abstract
Purpose
The paper addresses the following research question: how do decision-makers use heuristics in their international business (IB) environment? Whereas, the literature has focused on entrepreneurial companies, here contrasting approaches to learning and using heuristics in international marketing (IM) decisions are examined and discussed.
Design/methodology/approach
The paper aims to address a gap in the study of micro-foundations of internationalization, exploiting research from other disciplinary fields. It combines a multidisciplinary literature review and longitudinal case studies to illustrate different approaches in learning and using heuristics by international marketers.
Findings
International marketers can adopt “closed” heuristics that are consolidated and consistently followed, or “open” heuristics, which are constantly being adapted and learned. Established multinationals learn heuristics in international marketing decision-making, following both “closed” and “open” models.
Originality/value
This paper offers an original contribution by presenting different approaches not yet examined in the literature, focusing on how international marketers make decisions through learning and using heuristic rules. The focus is on established exporters, in contrast to the literature that has largely paid attention to the effectiveness of heuristics in new entrepreneurial firms.
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This paper presents the outcome of research related to application of formal rules and standard procedures in EAsʼ procurement of goods and services for foreign aid-funded…
Abstract
This paper presents the outcome of research related to application of formal rules and standard procedures in EAsʼ procurement of goods and services for foreign aid-funded projects. Executing agencies are entrusted to implement foreign aid-funded projects on behalf of respective governments and they are required to satisfy a combination of rules of their multiple principals, mainly donor organizations and respective government ministries. The theoretical framework of this study is guided by agency theory. The findings indicate that the processing of procurement related information and awarding contracts by the executing agencies in the context of Bangladesh is heavily dependent on the informal working systems or “unwritten ground rules”. These are driven by downward hierarchical verbal and non-verbal instructions. The study has adopted a qualitative method following a grounded theory approach.
Petru Lucian Curseu, Sandra G. L. Schruijer and Oana Catalina Fodor
The purpose of this paper is to test the influence of collaborative and consultative decision rules on groups’ sensitivity to framing effect (FE) and escalation of commitment…
Abstract
Purpose
The purpose of this paper is to test the influence of collaborative and consultative decision rules on groups’ sensitivity to framing effect (FE) and escalation of commitment (EOC).
Design/methodology/approach
In an experimental study (using a sample of 233 professionals with project management experience), the authors test the effects of collaborative and consultative decision rules on groups’ sensitivity to EOC and FE. The authors use four group decision-making tasks to evaluate decision consistency across gain/loss framed decision situations and six decision tasks to evaluate EOC for money as well as time as resources previously invested in the initial decisions.
Findings
The results show that the collaborative decision rule increases sensitivity to EOC when financial resources are involved and decreases sensitivity to EOC when time is of essence. Moreover, the authors show that the collaborative decision rule decreases sensitivity to FE in group decision making.
Research limitations/implications
The results have important implications for group rationality as an emergent group level competence by extending the insights concerning the impact of decision rules on emergent group level cognitive competencies. Due to the experimental nature of the design, the authors can probe the causal relations between the investigated variables, yet the authors cannot generalize the results to other settings.
Practical implications
Managers can use the insights of this study in order to optimize the functioning of decision-making groups and to reduce their sensitivity to FEs and EOC.
Originality/value
The study extends the research on group rationality and it is one of the few experimental attempts used to understand the role of decision rules on emergent group level rationality.
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Dilupa Nakandala, Henry Lau and Jingjing Zhang
Logistics practitioners must continually improve inventory management processes as they daily respond to the twin drivers of customer satisfaction and cost efficiency. The purpose…
Abstract
Purpose
Logistics practitioners must continually improve inventory management processes as they daily respond to the twin drivers of customer satisfaction and cost efficiency. The purpose of this paper is to investigate the scenario of sourcing goods through lateral transshipments in a periodic-review policy setting, against a backdrop of cost optimization objectives.
Design/methodology/approach
The authors develop decision rules that make cost-optimized selection between backordering and combined reactive and proactive lateral transshipment options possible. This necessarily takes account of the trade-off between purchasing, holding and backorder cost components. In addition, the authors use simulation studies to illustrate the superior performance of the proposed decision options.
Findings
According to results of the simulation studies, the proposed two-step decision rule generates the lower inventory cost than the alternative decisions rules. The outperformance of proposed two-step decision rule is valid in different scenario.
Practical implications
This study develops the decision rules to assist wholesaler logistics practitioners to make optimized decisions with regard to whether they should proactively lateral transshipments and if selected, the optimum size of the extra lateral transshipment.
Originality/value
This study has made a significant contribution to the existing knowledge base as it develops decision rules for a combined proactive and reactive approach using lateral transhipments to meet both urgent demand and a part of the demand expected during the supplier lead time in a cost-efficient way.
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