The Map or the Reality? How Leverage Effects of Time Leakages Distort Key Ratios in Information Economy

This paper addresses specifically leverage effects based on the irreversible nature of time and the Cognitive Time Distortion in economy. In service and information society, time has received an ever increasing importance, not from the perspective of faster production, but due to the fact that the major part of the economic value of Total Revenues and Total Costs is based on time. In this paper, we demonstrate new mathematical mechanisms in economy due to the irreversible nature of time and Cognitive Time Distortion, and we explore their lever effects. It is presented that the lever effect on return on capital employed may rise to many hundred percent of budgeted outcome. It is concluded that even moderate cognitive time distortions cause substantial deviation in budgeted profit as well as it proves to be a mechanism to large delays. The lever effect due to the time perception is an ever present distortion of a true economic outcome.