Decision-Making Essay Example | Topics and Well Written Essays - 1500 words

Decision-Making - Essay Example The soft information is defined as the information that is unverifiable and private. The private information is the one that is not available to the public and can only be sourced from the primary source of the information. Among the soft information real-time flow, real-time-accounting personal assets and debts, career history or family matters are only verifiable by the third party by quantifiable information or objective or by use of legal documents. Valid information can be accessed by the financial institution in a credible way but the unverifiable information can be transmitted in a credible way, and it requires some effort from the firms and the shareholder. The private information can hardly be transferred even within the firm. In the firm's lending decision to another small firm, the branch officials typically collect the required information for the decision to be made. After the collection of the relevant information, the decision is made by the decision-making authority. In cases like this, the firm's staff are not allowed to collect the information required for the decision-making. Thus, the hierarchical, allocated decision authorities are mandated to make the decision of the firm. The statistical evidence showed that the asset size of a financial institution is positively correlated with the soft information usage. The result is more contradicting as compared to the intuition that financial firms are less likely to apply to soft information and cast doubts on the empirical strategy.