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Functional approach in decision-making: Dysfunction and efficiency of rules and systems

Author

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  • Oleg S. Sukharev

    (Institute of Economics of the Russian Academy of Sciences, Moscow, Russia)

Abstract

The theoretical study aims at developing the functional approach to the choice of economic decisions by revising rationalistic criteria with respect to the relationship between efficiency and dysfunction as a parameter characterizing the disorder (failure to perform) the functions of the controlled system. From this perspective, there was no solution to this scientific problem. The paper focuses on the analysis of criteria for making economic choice from the available alternatives using the case of investment and technological choice, i.e. the distribution of resources among areas of use, as well as technological substitution and supplement. Decision theory applied to the problem of choosing from economic alternatives constitutes the methodological basis of the study. The research methods are structural and mathematical functional analysis. We introduce an additional decisionmaking criterion reduced to an assessment of the controlled system’s dysfunction while establishing its possible relationship with the efficient functioning. This allows one to prove that the difference in the laws of change in the number of functions performed and their total number in an economic system of any level of complexity, as well as the law of behaviour of costs incurred in the implementation of the functions, determines the relationship between dysfunction and the efficiency of functioning. The results show that the use of rationalistic criteria, such as the greatest manufacturability and the lowest costs, does not take into account the “structural effect” of distribution and functional use of the resource received by the object. Thus, the obtained ratios of dysfunction and efficiency are an additional useful criterion when weighing alternatives.

Suggested Citation

  • Oleg S. Sukharev, 2021. "Functional approach in decision-making: Dysfunction and efficiency of rules and systems," Upravlenets, Ural State University of Economics, vol. 12(1), pages 2-17, March.
    • Handle: RePEc:url:upravl:v:12:y:2021:i:1:p:2-17
    DOI: 10.29141/2218-5003-2021-12-1-1
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    References listed on IDEAS

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    Cited by:

    1. Oleg S. Sukharev, 2022. "Institutional adjustments in management: A theoretical-methodological approach," Upravlenets, Ural State University of Economics, vol. 13(1), pages 37-48, March.

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    More about this item

    Keywords

    management; investment decision; change in the number of functions; decision-making criterion; dysfunction; efficiency; choice of technological alternative;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform

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