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Applications of Belief Functions in Business Decisions: A Review

Author

Listed:
  • Rajendra P. Srivastava

    (The University of Kansas)

  • Liping Liu

    (University of Akron)

Abstract

In this paper, we review recent applications of the Dempster-Shafer theory (DST) of belief functions to auditing and business decision-making. We show how DST can better map uncertainties in application domains than Bayesian theory of probabilities. We review the applications in auditing around three practical problems that challenge the effective application of DST, namely, hierarchical evidence, versatile evidence, and statistical evidence. We review the applications in other business decisions in two loose categories: judgment under ambiguity and business model combination. Finally, we show how the theory of linear belief functions, a new extension to DST, can provide an alternative solution to a wide range of business problems.

Suggested Citation

  • Rajendra P. Srivastava & Liping Liu, 2003. "Applications of Belief Functions in Business Decisions: A Review," Information Systems Frontiers, Springer, vol. 5(4), pages 359-378, December.
    • Handle: RePEc:spr:infosf:v:5:y:2003:i:4:d:10.1023_b:isfi.0000005651.93751.4b
    DOI: 10.1023/B:ISFI.0000005651.93751.4b
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    References listed on IDEAS

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    1. Curley, Shawn P. & Golden, James I., 1994. "Using Belief Functions to Represent Degrees of Belief," Organizational Behavior and Human Decision Processes, Elsevier, vol. 58(2), pages 271-303, May.
    2. Robin M. Hogarth & Hillel J. Einhorn, 1990. "Venture Theory: A Model of Decision Weights," Management Science, INFORMS, vol. 36(7), pages 780-803, July.
    3. Liu, Liping & Shenoy, Prakash P, 1995. "A Theory of Coarse Utility," Journal of Risk and Uncertainty, Springer, vol. 11(1), pages 17-49, July.
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    Cited by:

    1. Wang, Ying-Ming & Yang, Jian-Bo & Xu, Dong-Ling, 2006. "Environmental impact assessment using the evidential reasoning approach," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1885-1913, November.
    2. Wang, Ying-Ming & Yang, Jian-Bo & Xu, Dong-Ling & Chin, Kwai-Sang, 2006. "The evidential reasoning approach for multiple attribute decision analysis using interval belief degrees," European Journal of Operational Research, Elsevier, vol. 175(1), pages 35-66, November.
    3. Beynon, Malcolm J. & Andrews, Rhys & Boyne, George A., 2010. "Evidence-based modelling of strategic fit: An introduction to RCaRBS," European Journal of Operational Research, Elsevier, vol. 207(2), pages 886-896, December.
    4. Rajendra P. Srivastava & Theodore J. Mock & Lei Gao, 2011. "The Dempster-Shafer Theory: An Introduction and Fraud Risk Assessment Illustration," Australian Accounting Review, CPA Australia, vol. 21(3), pages 282-291, September.

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