Economics Insights @ CBS

The value of a business depends on its future not its past. Nonetheless, some managers base key decisions on backwards-looking metrics or models that have been shown to be inappropriate in many situations.

What metrics and models can provide managers with steering control for maximizing the value of their business? This editorial provides some ideas.

There are obvious economic predictors of ability and willingness to invest in environmental sustainability. Yet, given that environmental decisions represent trade-offs between present sacrifices and uncertain future benefits, psychological factors may also play a role in country-level environmental behavior. Gott's principle suggests that citizens may use perceptions of their country's age to predict its future continuation, with longer pasts predicting longer futures.

Although a great deal of research has examined specific behaviors that positively affect leaders' negotiation processes and outcomes, there has been considerably less attention devoted to stable characteristics, psychological or physical, that might also influence outcomes at the bargaining table. In the current research, we identify a measureable physical trait — the facial width-to-height ratio — that predicts negotiation performance in men.

Aggregation, and minimizing associated information loss, is a pervasive theme in accounting. In contrast, this paper highlights some potential benefits of aggregation, using simple examples to illustrate ideas from a number of recent papers in a parsimonious manner. Aggregation rules can improve decision making because of their ability to convey appropriate information and because such rules may permit offsetting errors. Turning to control problems, aggregation has merit in the provision of both explicit and implicit incentives.