scholarly journals Can process accountability mitigate myopic biases? An experimental analysis

2022 ◽  
Author(s):  
Mina Ličen ◽  
Sergeja Slapničar
Keyword(s):  
Decision Making ◽  
Experimental Design ◽  
Risk Aversion ◽  
Discount Rate ◽  
Experimental Analysis ◽  
Research Question ◽  
Management Control ◽  
Probability Discounting ◽  
Choice Tasks ◽  
The Impact

AbstractThis paper examines the impact of process accountability on two biases causing myopic or short-sighted decision making. These biases are strong preferences for immediate and certain outcomes known as delay and risk aversion. We hypothesize that accountability alone is insufficient to undo the biases, but if coupled with a cue on subjective discount rates, it will attenuate biases. To analyze our research question, we used a within- and between-subjects experimental design (two accountability conditions compared with a non-accountability condition and with each other) with delay and probability discounting choice tasks involving 118 students of accounting, finance and management in an online experiment. In line with our hypotheses, we find that process accountability successfully reduces excessive delay and risk aversion only if it provides a cue about the subjective discount rate. We discuss the implications of our findings for management control.

scholarly journals The impact of enterprise systems in management decision making

2012 ◽  
Vol 1 (1) ◽  
pp. 68-72
Author(s):  
Muthuvelayutham C ◽  
Sugantha lakshm T
Keyword(s):  
Decision Making ◽  
Enterprise Resource Planning ◽  
Local Level ◽  
Resource Planning ◽  
Management Control ◽  
Point Of View ◽  
Management Decision ◽  
Erp Systems ◽  
Erp System ◽  
The Impact

An Enterprise Resource Planning (ERP) system is composed of a basic transactional system and a management control system. Sammon et al. (2003) describesthese 2 components of ERP systems as the solution to “operational” integration problems and “informational” requirements of managers. Thus, the extreme standardisation of business process inherent in ERP systems creates huge volumes of data without providing a clue for how to exploit it and may therefore not beneficial from a decision-making point of view. In this paper, decision-making theory and models are reviewed, focusing on how an ERP implementation might impact on these constructs. This paper is an analysis about centralisation of decision making in an organisation and its impact on performance at a local level.

scholarly journals Principled Utility Discounting Under Risk

2019 ◽  
Vol 6 (1) ◽  
pp. 89-112 ◽  
Author(s):  
Kian Mintz-Woo
Keyword(s):  
Decision Making ◽  
Discount Rate ◽  
Probability Discounting ◽  
Normative Reasons ◽  
Economic Modelling ◽  
Discount Rates ◽  
Decision Making Under Risk ◽  
Model Independent ◽  
Future Utility

Abstract Utility discounting in intertemporal economic modelling has been viewed as problematic, both for descriptive and normative reasons. However, positive utility discount rates can be defended normatively; in particular, it is rational for future utility to be discounted to take into account model-independent outcomes when decision-making under risk. The resultant values will tend to be smaller than descriptive rates under most probability assignments. This also allows us to address some objections that intertemporal considerations will be overdemanding. A principle for utility discount rates is suggested which is rooted in probability discounting. Utility discounting is defended against objections from Parfit (1984) and Broome (2005); Broome (2012). A sample utility discount rate is estimated.

scholarly journals Measurement of the Human Capital Applied to the Business Eco-Innovation

2019 ◽  
Vol 11 (12) ◽  
pp. 3263 ◽  
Author(s):  
Raquel Ortega-Lapiedra ◽  
Miguel Marco-Fondevila ◽  
Sabina Scarpellini ◽  
Fernando Llena-Macarulla
Keyword(s):  
Decision Making ◽  
Human Capital ◽  
Empirical Research ◽  
Theoretical Framework ◽  
Management Control ◽  
Decision Making Process ◽  
Resource Based View ◽  
Specific Index ◽  
Specific Human Capital ◽  
The Impact

Despite the growing number of studies on eco-innovation, the specific human capital applied to the eco-innovative processes by firms has not been thoroughly analyzed to date. Due to this gap, this study carries out an empirical research about the definition and measurement of the human capital applied to business eco-innovation in terms of knowledge. For this purpose, we define a human capital specific index (HCSI) to analyze the influence of firms’ human capital in their eco-innovative activities. The results have been obtained through the analysis of a sample of eco-innovative Spanish firms and they show some relevant implications for practitioners regarding the decision-making process in promoting eco-innovation and for the management control of eco-innovative processes. One of the study contributions for academics is to increase the knowledge about the measurement and the impact of the specific human capital applied to eco-innovation by firms in the theoretical framework of the resource-based view theory (RBV).

scholarly journals If We Could Choose The Way We Pay: The Impact Of Decision Complexity On Tax Scheme Preference

2011 ◽  
Vol 22 (3) ◽  
Author(s):  
Jeffrey P. Katz ◽  
Richard L. Ott
Keyword(s):  
Decision Making ◽  
Experimental Design ◽  
Tax Policy ◽  
Organizational Psychology ◽  
Tax Structure ◽  
Business Decisions ◽  
Tax Simplification ◽  
Policy Impacts ◽  
Decision Complexity ◽  
The Impact

A continuing debate exists about how the complex U.S. tax code has resulted in counter-productive business decisions. Our study examines how tax policy impacts taxpayer decision-making. We present a model addressing factors impacting taxpayer decision-making and test our resulting hypotheses using an experimental design drawn from industrial and organizational psychology. We find that the context of the taxpayer's personal situation significantly affects the decision to favor changes in tax policy. Consistent with our hypotheses, we find that taxpayers having a more complex tax situation will tend to support a tax simplification proposal less than those with simpler tax situations. Our study provides unique evidence that taxpayers having more complex tax situations feel more in control of their decisions under the existing tax structure than those having simpler tax situations. Implications for decision-making researchers and tax policymakers are offered.

Unfolding irrationality: how do meaningful coincidences influence management decisions?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Matteo Cristofaro
Keyword(s):  
Decision Making ◽  
Research Question ◽  
Well Being ◽  
Cognitive Errors ◽  
Affective States ◽  
Management Decisions ◽  
Content Type ◽  
Cognitive Decision ◽  
Symbolic Content ◽  
The Impact

Purpose This study aims to answer the following research question: “How do meaningful coincidences influence management decisions?” This question has gained relevance mainly because of the increasing attention of scholars in explaining the irrational pressures that shape management decisions, which should be inevitably taken into account to discover the causative factors of firms’ performances. Design/methodology/approach A multiparadigm approach to theory building has been adopted, known as “metatriangulation.” This study consisted of exploring the interplay between the synchronicity concept of Jung and cognitive studies. As a result, this work proposes a conceptual framework that refers to both sensemaking and cognitive decision-making literature. Findings The framework proposes that the perceived certainty (or not) about the potential outcome for the well-being, coming from the occurrence of meaningful coincidences, elicits a set of positive (or negative) affective states. These states activate a series of cognitive errors that drive the assignment of a symbolic content to the coincidences, bringing different risk-oriented management decisions. Research limitations/implications The provided model is purely conceptual and based on the current pool of knowledge available. As much as empirical evidence will be produced, this model may need revision. This framework proposes the interpretation of meaningful coincidences not only as the output of a number of information processing biases, but also as inputs, through the elicited affect heuristic, for the occurrence of other cognitive errors that drive management decisions. Practical implications The explained influence of irrational forces on management decisions, also considering luck and chance, can be fruitful to avoid these behaviors or to intentionally adopt them in selected cases, e.g. when looking for attractive unexploited opportunities within markets. Originality/value To the best of the author’s knowledge, this is the first work that attempts to unveil the impact of meaningful coincidences and, more in general, of irrational forces on management decisions. Moreover, the provided framework explains how superstitious events are sometimes looked for to guide decision-making.

scholarly journals The Effects of Incentive Systems and Organizational Culture on Strategy Surrogation

2019 ◽  
Vol 14 (1) ◽  
pp. 219-245
Author(s):  
Kazeem Olalekan Akinyele ◽  
Keyword(s):  
Decision Making ◽  
Organizational Culture ◽  
Organizational Context ◽  
Pay For Performance ◽  
Management Control ◽  
Amazon Mechanical Turk ◽  
Compensation Scheme ◽  
Incentive Systems ◽  
Performance Measurement Systems ◽  
The Impact

The purpose of this study was to investigate the impact of an important aspect of an organizational context, specifically organizational culture, and different types of compensation schemes on strategy surrogation. Strategy surrogation occurs when managers focus on the measures in the strategic performance measurement systems (SPMS) on which they are compensated and completely or partially lose focus on the overall strategic objectives of the organization. This study utilized a 2x2 between-participants experimental design that manipulates organizational culture (controldominant vs. flexibility-dominant) and the type of compensation scheme (fixed pay vs. pay-for-performance). The study was conducted online with 80 participants from the Amazon Mechanical Turk (MTurk) as proxies for managers. The results show that employees operating under a controldominant culture do not surrogate more than employees operating under a flexibility-dominant culture. Additionally, the type of organizational culture does not moderate the relationship between incentive systems and strategy surrogation. However, employees operating under a pay-for-performance compensation scheme significantly surrogate more than employees operating under a fixed pay compensation scheme. The study contributes to the incentives and organizational culture literature as well as strategy surrogation research by examining institutional factors that may inhibit or exacerbate surrogation. Additionally, the study contributes to the judgment and decision-making literature by highlighting employees’ decision-making outcomes under different compensation schemes. Keywords: organizational culture, incentive systems, strategy surrogation, informal management control system

Factors affecting investment decision-making in Pakistan stock exchange

2018 ◽  
Vol 05 (04) ◽  
pp. 1850033 ◽  
Author(s):  
Adeel Mumtaz ◽  
Tahir Saeed ◽  
M. Ramzan
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Risk Aversion ◽  
Stock Exchange ◽  
Investment Decision ◽  
Least Square ◽  
Individual Investors ◽  
Investment Decision Making ◽  
Tools And Techniques ◽  
The Impact

This study analyzes the impact of various factors like heuristic, risk aversion, financial tools and techniques, firm’s corporate governance, and day-to-day experience on the investor’s decision-making. The sample consisted of 701 individual investors trading in the Pakistan Stock Exchange. The Ordinary Least Square (OLS) is used for the estimation of research models. The findings revealed that heuristics, risk aversion, financial tools and techniques have a significant positive effect on the investment decisions of investors. The day-to-day experience and corporate governance (CG) play an important role in investment decision-making of the financial sector in Pakistan. This study will contribute to creating awareness in a diversity of investors for investing in the equity market and increases the investors’ confidence.

Sign in / Sign up

Export Citation Format

Share Document