Biung-Ghi Ju/Unanimity and Resource Monotonicity 1–17 Young-Ran Roh/Is the Disposition of Constrained Maximization Chosen Rationally? 19–41 Eric Langlais/Willingness to pay for Risk Reduction and Risk Aversion without the Expected Utility As [Book Review]

Theory and Decision 59 (1):345-346 (2005)
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Abstract

A decomposition model of Net Final Values, named Systemic Value Added, is proposed for decision-making purposes, based on a systemic approach introduced in Magni [Magni, C. A., Bulletin of Economic Research 55, 149–176; Magni, C. A. Economic Modelling 21, 595–617]. The model translates the notion of excess profit giving formal expression to a counterfactual alternative available to the decision maker. Relations with other decomposition models are studied, among which Stewart’s [Stewart, G.B., The Quest for Value: The EVA™ Management Guide, Harper Collins, Publishers Inc]. The index here introduced differs from Stewart’s Economic Value Added in that it rests on a different interpretation of the notion of excess profit and is formally connected with the EVA model by means of a shadow project. The SVA is formally and conceptually threefold, in that it is economic, financial, accounting-flavoured. Some results are offered, providing sufficient and necessary conditions for decomposing NFV. Relations between a project’s SVA and its shadow project’s EVA are shown, all results of Pressacco and Stucchi [Pressacco, F. and Stucchi, P., Rivista di Matematica per le Scienze Economiche e Sociali 20, 165–185] are proved by making use of the systemic approach and the shadow counterparts of those results are also shown.

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