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Sequential Bayesian Analysis in accounting settings

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  • AMIN H. AMERSHI
  • JOEL S. DEMSKI
  • JOHN FELLINGHAM

Abstract

. The familiar decision analysis setting in accounting, such as a cost†volume†profit analysis setting, is modeled as arising in a “larger†context in which subsequent choice is also contemplated. We then ask when this “larger†context decomposes in a manner such that the immediate problem of interest can be modeled as an expected utility maximization problem that is completely divorced from the subsequent choice problem. Outcome and taste independence conditions are the key ingredients in being able to model the immediate problem as having no link whatever to its successor. Résumé. Le contexte dans lequel les techniques d'analyse de décision comme par exemple l'analyse coĉt†volume†profit est utilisée est un cadre d'un modèle élargi qui tient compte du choix subséquent. On se demande en quelles circonstances ce contexte élargi peut†il se décomposer de façon telle que le problème d'intérêt immédiat en soit un de maximisation complètement séparé du problème du choix subséquent. Le résultat et des conditions d'indépendance de préférence sont les ingrédients clés pour modeler le problème immédiat comme n'ayant aucun lien avec son successeur.

Suggested Citation

  • Amin H. Amershi & Joel S. Demski & John Fellingham, 1985. "Sequential Bayesian Analysis in accounting settings," Contemporary Accounting Research, John Wiley & Sons, vol. 1(2), pages 176-192, March.
  • Handle: RePEc:wly:coacre:v:1:y:1985:i:2:p:176-192
    DOI: 10.1111/j.1911-3846.1985.tb00375.x
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    References listed on IDEAS

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    1. Ramji Balakrishnan, 1990. "The role of budgets and variances in repeated investment decisions," Contemporary Accounting Research, John Wiley & Sons, vol. 7(1), pages 105-122, September.
    2. Anil Arya & Jonathan Glover & Pierre Jinghong Liang, 2004. "Intertemporal aggregation and incentives," European Accounting Review, Taylor & Francis Journals, vol. 13(4), pages 643-657.
    3. Arya, Anil & Fellingham, John & Glover, Jonathan, 1997. "Teams, repeated tasks, and implicit incentives," Journal of Accounting and Economics, Elsevier, vol. 23(1), pages 7-30, May.
    4. Ramji Balakrishnan, 1992. "The value of communication in resource allocation decisions," Contemporary Accounting Research, John Wiley & Sons, vol. 8(2), pages 353-373, March.

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