Parametric sensitivity in decision making process

Abstract

This paper introduces a possibility of application of parametric sensitivity appearing in processes of decision making in systems represented by the general production functions of the Tinbergen type, depending on information content, information flow and qualification of human resources. The so-called parametric sensitivity considering the information content I as an ordering parameter, dependent on the information flow φ, applied on production function. The theory of production function describes the relation between physical outputs of a production process and physical inputs, i.e. factors of production. Finally, the influence of knowledge in information content I, leading to correct decision, is demonstrated through the parametric sensitivity concept. For this invention, J. Tinbergen and R. Frisch achieved in 1969 the “Nobel price of the Swedish National Bank”. Besides, the production functions theory surprisingly represents also a tool for finding the reasons of living bodies behavior.