Participative Budgeting under Uncertainty : A Decision-Theoretic Approach.

N. H. Hakansson

Expert InsightsPublished 1971

A theoretical approach to budgeting when there are several decisionmakers. The method lends itself to organizations with an inherently hierarchical structure. If there is partial agreement on activities, the budgeting effort can be reduced considerably. Instead of verbal statements to support specific dollar requests, the approach suggests that each participant submit a numerical schedule of relative merit for possible outcomes, or utility functions, and dollar inputs, or probability functions. In this way, the organization's best talents can be used, with little risk that cheating will appear profitable to any individual. Required values and likelihoods are obtained from specialists; calculations and random choices are computerized. To the extent that there are honest differences between the participants, final allocation is due to chance. The method also aids determination of total budget size. 74 pp. Ref.

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1971
  • Pages: 74
  • Document Number: P-4496

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Hakansson, N. H., Participative Budgeting under Uncertainty : A Decision-Theoretic Approach. Santa Monica, CA: RAND Corporation, 1971. https://www.rand.org/pubs/papers/P4496.html.
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