Individual differences in managerial accounting judgments and decision making

Stephen A. Butler and Dipankar Ghosh

The British Accounting Review, 2015, vol. 47, issue 1, 33-45

Abstract: Managers are influenced in their decisions by the information provided by managerial accountants. Two typical examples from textbooks are the irrelevance of sunk costs and, more recently, the affect of knowing the outcome of a decision or revised budget forecast. Individual differences in the cognitive ability of decision makers to use information can lead to systematic differences in judgments. We identify and label one of these individual cognitive differences comprehensive thinking ability: the ability to think about multiple paths, branches or alternatives. Significant comprehensive thinking ability is likely to mitigate systematic differences in judgment in many contexts. We report the results of a series of studies using a variation on the investment trap (sunk cost or irrelevant cost) problem and a probability revision task. The findings suggest that comprehensive thinking ability may also explain other common systematic differences in judgment.

Keywords: Judgment; Decision making; Management accounting; Decision aid (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0890838914000699
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:47:y:2015:i:1:p:33-45

DOI: 10.1016/j.bar.2014.09.002

Access Statistics for this article

The British Accounting Review is currently edited by Nathan Lael Joseph and Alan Lowe

More articles in The British Accounting Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().