When Can AI Reduce Individuals’ Anchoring Bias and Enhance Decision Accuracy? Evidence from Multiple Longitudinal Experiments

Behavioral Finance is an evolving field that studies how psychological factors affect decision making under uncertainty. Herding behavior is one of the psychological factors that instigate investor to mimic the actions of other investors in the market rather than using his personal assessments. This study seeks to find the influence of certain attitudinal factors namely, decision conformity, hasty decision, mood, decision accuracy, and overconfidence, on the individual investor tendency to embrace herd behavior. Primary data for the study are collected using structured questionnaires from a sample of 194 investors who are trading at Islamabad and Lahore branches of Pakistan Stock Exchange. Multiple linear regression analysis is used to test the hypotheses of this study. Findings of this study provide evidence that attitudinal factors have a significant influence on investor’s tendency to take on herd behavior. It is concluded from the results of multiple linear regression that decision conformity, mood, and decision accuracy have a significant impact on individual investor tendency to adopt herd behavior. However, investor hasty decision and overconfidence is insignificant predictors of herd behavior. Keywords: Decision conformity, Hasty decision, Mood, Decision accuracy, Overconfidence, Herd behavior

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External Auditors' Involvement in the Internal Audit Function's Work Plan and Subsequent Reliance Before and After a Negative Audit Discovery

Auditing A Journal of Practice & Theory ◽

10.2308/ajpt-51486 ◽

2016 ◽

Vol 35 (4) ◽

pp. 159-173 ◽

Cited By ~ 4

Author(s):

Byron J. Pike ◽

Lawrence Chui ◽

Kasey A. Martin ◽

Renee M. Olvera

Keyword(s):

Internal Control ◽

Internal Audit ◽

Internal Controls ◽

Professional Standards ◽

Data Availability ◽

Internal Auditors ◽

External Auditors ◽

Internal Audit Function ◽

Anchoring Bias ◽

Before And After

SUMMARY To reduce redundancies and increase efficiency in the evaluation of internal controls (PCAOB 2007, 402–403), professional standards encourage coordination between external auditors and their clients' internal audit function (IAF). Recent surveys of internal auditors find that a component of this coordination is external auditors' involvement in developing the IAF's audit plans. Nevertheless, it is not known how such involvement affects external auditors' reliance on the internal control test work of the IAF, either before or after a negative audit discovery. Based on an experiment with 107 experienced auditors, we find that external auditors involved in the development of the IAF's audit plan perceive the IAF as more objective and that both objectivity and involvement contribute to these auditors' placing more reliance on the IAF as compared to external auditors with no involvement. This initial reliance results in the involved auditors' proposing reductions to the audit budget and re-performing less of the IAF's work. Consistent with an anchoring bias, we find that involvement leads to external auditors' continuing to place greater reliance on the IAF's work, even after they become aware of a negative audit discovery that should not have occurred had the client's controls been effective. Data Availability: Data are available from the authors on request.

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The role of buy-side anchoring bias: Evidence from the real estate market

Pacific-Basin Finance Journal ◽

10.1016/j.pacfin.2016.02.008 ◽

2016 ◽

Vol 38 ◽

pp. 34-58 ◽

Cited By ~ 9

Author(s):

Chuang-Chang Chang ◽

Ching-Hsiang Chao ◽

Jin-Huei Yeh

Keyword(s):

Real Estate ◽

Real Estate Market ◽

The Real ◽

The Real Estate ◽

The Real Estate Market ◽

Anchoring Bias

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Utilisation of musculoskeletal ultrasonography for the evaluation of septic arthritis in a patient presenting to the emergency department with fever during the era of COVID-19

BMJ Case Reports ◽

10.1136/bcr-2021-242370 ◽

2021 ◽

Vol 14 (4) ◽

pp. e242370

Author(s):

Jiodany Perez ◽

Stefani Sorensen ◽

Michael Rosselli

Keyword(s):

Emergency Department ◽

Septic Arthritis ◽

Glenohumeral Joint ◽

Imaging Modality ◽

Point Of Care ◽

Significant Morbidity ◽

Anchoring Bias ◽

Septic Bursitis ◽

Musculoskeletal Ultrasonography ◽

Point Of Care Ultrasonography

Prompt recognition and treatment of septic arthritis are crucial to prevent significant morbidity and mortality in affected patients. During the current COVID-19 pandemic, anchoring bias may make an already challenging diagnosis like septic arthritis more difficult to diagnose quickly and efficiently. Musculoskeletal (MSK) point of care ultrasonography (POCUS) is an imaging modality that can be used to quickly and efficiently obtain objective findings that may help a clinician establish the diagnosis of septic arthritis. We report a case where MSK POCUS was a key element in establishing the diagnosis of glenohumeral joint septic arthritis and subdeltoid septic bursitis for a patient that presented to the emergency department with a fever during the era of the COVID-19 pandemic.

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“It’s not lupus”. A placental site trophoblastic tumor presenting as a lupus-like paraneoplastic syndrome. A grand round case

Lupus ◽

10.1177/0961203320981765 ◽

2021 ◽

pp. 096120332098176

Author(s):

Sarah J van der Lely ◽

Jeffrey Boorsma ◽

Marc Hilhorst ◽

Jesper Kers ◽

Joris Roelofs ◽

...

Keyword(s):

Nephrotic Syndrome ◽

Lupus Erythematosus ◽

Kidney Biopsy ◽

Gestational Trophoblastic Disease ◽

Grand Round ◽

Placental Site Trophoblastic Tumor ◽

Trophoblastic Tumor ◽

Anchoring Bias ◽

Placental Site ◽

History Of

Introduction: Placental site trophoblastic tumor (PSTT) is a rare subtype of gestational trophoblastic disease. Association of PSTT and nephrotic syndrome is exceedingly rare and has been described in 8 cases thus far. In all cases hysterectomy was performed within months after onset of symptoms, leading to immediate remission of nephrotic syndrome, except for one patient who died of complications of PSTT. Case: We describe the history of a woman in which PSTT was discovered years after onset of nephrotic syndrome. Kidney biopsy revealed lupus-like mesangiocapillary nephritis and over time the patient developed additional symptoms mimicking systemic lupus erythematosus (SLE). Discussion: We provide an overview of the literature on this clinical entity and elaborate on its pathophysiology. In addition, we reflect on the phenomenon of anchoring bias, that led physicians to assume the patient had SLE without questioning this diagnosis in the light of the unexplained finding of increased tumor markers.

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Are children’s judgments of another’s accuracy linked to their metacognitive confidence judgments?

Metacognition and Learning ◽

10.1007/s11409-021-09263-x ◽

2021 ◽

Author(s):

Carolyn Baer ◽

Puja Malik ◽

Darko Odic

Keyword(s):

Signal Detection ◽

Signal Detection Theory ◽

Learning Task ◽

Detection Theory ◽

Simulation Theory ◽

Reasoning Task ◽

Decision Accuracy ◽

Self And Other ◽

Highly Correlated ◽

Tight Correlation

AbstractThe world can be a confusing place, which leads to a significant challenge: how do we figure out what is true? To accomplish this, children possess two relevant skills: reasoning about the likelihood of their own accuracy (metacognitive confidence) and reasoning about the likelihood of others’ accuracy (mindreading). Guided by Signal Detection Theory and Simulation Theory, we examine whether these two self- and other-oriented skills are one in the same, relying on a single cognitive process. Specifically, Signal Detection Theory proposes that confidence in a decision is purely derived from the imprecision of that decision, predicting a tight correlation between decision accuracy and confidence. Simulation Theory further proposes that children attribute their own cognitive experience to others when reasoning socially. Together, these theories predict that children’s self and other reasoning should be highly correlated and dependent on decision accuracy. In four studies (N = 374), children aged 4–7 completed a confidence reasoning task and selective social learning task each designed to eliminate confounding language and response biases, enabling us to isolate the unique correlation between self and other reasoning. However, in three of the four studies, we did not find that individual differences on the two tasks correlated, nor that decision accuracy explained performance. These findings suggest self and other reasoning are either independent in childhood, or the result of a single process that operates differently for self and others.

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The Effects of Amount of Information Provided and Feedback of Results on Decision Making Efficiency

Human Factors The Journal of the Human Factors and Ergonomics Society ◽

10.1177/001872086500700602 ◽

1965 ◽

Vol 7 (6) ◽

pp. 513-520 ◽

Cited By ~ 5

Author(s):

Charles H. Hammer ◽

Seymour Ringel

Keyword(s):

Decision Making ◽

Decision Makers ◽

Sequential Decision Making ◽

Sequential Decision ◽

Decision Accuracy ◽

Independent Variables ◽

Amount Of Information ◽

Taking Action

Sixty subjects worked a series of sequential decision making tasks in which the amount of information provided and feedback of results were the independent variables. Data were collected on decision accuracy, confidence in decision accuracy, and judged sufficiency of the information provided. Accuracy, confidence in accuracy, and ratings of sufficiency increased as amount of information provided was increased. Feedback produced increases in decision accuracy only. For forty percent of all correct responses, subjects judged the information provided to be insufficient as a basis for taking action. These data strongly suggest that lack of confidence in their ability to make accurate decisions may cause some decision makers to delay taking action even when they are able to make an accurate decision on the basis of the information available.

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Is Spatial-Visualization Ability a Stronger Predictor of Performance for Males than for Females on Computer-Based Tasks?

Proceedings of the Human Factors and Ergonomics Society Annual Meeting ◽

10.1177/154193120104501307 ◽

2001 ◽

Vol 45 (13) ◽

pp. 931-935

Author(s):

Elizabeth D. Murphy ◽

Bernd Lorenz

Keyword(s):

Personnel Selection ◽

Spatial Visualization ◽

Experimental Conditions ◽

Decision Accuracy ◽

Differential Prediction ◽

Simulated Environment ◽

On Line ◽

Computer Based ◽

Larger Sample ◽

Visualization Ability

In research on cognitive issues in automation, spatial visualization ability (SVA) was investigated as a mediator of performance. Prior to performing the experimental task in a simulation environment, 83 undergraduate psychology students completed an on-line version of a test of SVA. The two basic experimental conditions were “monitoring” and “on-call.” In the monitoring condition, participants monitored status messages and responded to system alerts. In the on-call condition, participants performed an unrelated task in between responding to alerts. Dependent measures included decision accuracy. A correlational analysis of SVA scores with decision accuracy found a higher correlation for men than for women. Further analysis indicated that SVA was not a significantly stronger predictor of performance for men than it was for women in the simulated environment. With a larger sample size, however, differential prediction is likely. If confirmed, this finding has implications for the use of SVA in personnel selection. Textual and tabular alternatives to graphical displays may be helpful to low-SVA users.

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