Action parameters

Action parameter is decision theory one of the makers as part of its decision in accordance with the objectives directly influenced (economic) size. Action parameters are available to all economic agents.

General

The concept of the action parameter goes back to Ragnar Frisch , who coined it in 1933. "The action parameters, ..., must be concidered as independent parameters". Erich Schneider introduced him to German literature in 1934. According to this, the action parameter "of a business entity is understood to be a variable that goes into its business plan, which the business entity can determine (fix) at its own discretion".

When making decisions, a distinction must be made between how far the decision-maker has an influence on the expected events. Ideally, decisions in companies should be able to directly influence certain economic variables with a view to improving benefits or increasing profits . The variables that can be influenced include, in particular, sales price and sales volume (economically only for monopolists), quality , delivery conditions , information , advertising , service , research and development . If decisions can only indirectly contribute to influencing these variables, one speaks of reaction parameters . With full competition , the price - which cannot be influenced by the individual company - is one of the reaction parameters. The action parameter is intended to achieve a specific reaction through the reaction parameter, which cannot be directly influenced by the decision maker. If the action parameter “price” is used, the sales volume in particular should react as a reaction parameter. An action parameter determines the use of funds, the need for funds is a reaction parameter and the availability of funds is a data parameter .

Action parameters in companies

Action parameters are of particular importance for companies and appear in a variety of ways as variables that the decision-maker can independently design. These are sizes that an entrepreneur selects in order to achieve a specific business goal. All operational functions such as procurement , production , sales or financing and the cross-sectional or service functions such as company management , human resources , administration , information , research and development and logistics have parameters that are typical for their area and serve as action parameters for decisions.

If a decision-maker, for example in company management, has the task of setting the sales price of a new product, he will usually orient himself towards the cost of goods and then add the profit margin , which results in the sales price. His decision to officially communicate this sales price as such in the company and to offer it on the market represents an action parameter. He can in fact assume with certainty that this sales price will be regarded and taken into account in the company and in the market as the official price. If the production decides on the increase of an operational partial capacity , this quantity is an action parameter. A business plan is optimal if their action parameters are set so that, taking into account restrictive acting data parameters, the target is a maximum. The action parameters for evaluation and accounting constitute a broad field in companies .

Action parameters in the economy

Economic policy

Governments can use parameters of action by enacting or amending laws . For the other economic subjects concerned, laws with economic effects are to be classified at least as reaction parameters or even as data parameters. This applies, for example, to tax laws through which taxes are levied by the state . In the event of an increase in income tax , taxpayers can not avoid it, at least in the short term. If, for example, the lawyer's fees are increased by the Federal Lawyers' Fees Regulations, all affected parties must comply with it, they are subject to a data parameter.

Central banks use the key interest rate as a key action parameter . If they change it, the interest rate level and the money supply are a reaction parameter for the central banks. They also have numerically fixable and permanently variable action parameters such as the minimum reserve (differentiated according to deposit categories and provided with legal upper limits). Since the commercial banks cannot escape this minimum reserve, the increase in the minimum reserve ratio will certainly lead to an increase in the minimum reserve; for the commercial banks, the minimum reserve is a data parameter.

Markets

The more open and less concentrated the markets are, the more likely all the action parameters available to companies will be used and vice versa. The action parameters “quality or service” are less measurable compared to the price, as they are more difficult to assess, the time lag is greater and can only be compared ordinally (the price can be measured cardinally ). A regulated market exists when the action parameters are subject to official intervention ( fixed , maximum or minimum prices ). Jan Tinbergen found out in 1966 that each additional action parameter can reduce incompatibilities in markets.

Others

In wealth creation, the action parameters of investment by companies and saving by private households are opposed. The accumulation of wealth results from mutual interaction ; because investments result in real wealth accumulation, saving promotes macroeconomic wealth accumulation. The private household possesses, as an action parameter (as a consumer of goods and services ), the quantity and quality it demands .

Action parameters in everyday life

The term originating from decision theory can be applied to all everyday situations in which decisions are pending. For those who have to decide which means of transport to use to travel to work and choose the bicycle , for them the bicycle is the action parameter , the road traffic is a reaction parameter and the weather is a data parameter.