Human judgment biases and the teaching of management accounting

Abstract

Abstract Managerial decision making often rests on subjective human judgment. Consequently, biases in these judgments can impose significant costs on an organization. This article encourages and assists accounting educators in introducing behavioral (qualitative) considerations when teaching management accounting courses. It summarizes an extensive literature which should allow accounting educators to alert future managers and management accountants to a growing body of evidence that subjective human judgment is often flawed. The limitation of human judgments are discussed and their implications for managerial decision making are delineated. The article concludes by offering a number of approaches to alleviate this problem.