Witnessing Your Own Cognitive Bias: A Compendium of Classroom Exercises

Abstract

ABSTRACTAccounting and auditing professors continually stress the importance of effective judgment and decision making (JDM), yet few accounting programs or textbooks discuss the biases that may impact an individual's ability to exercise high-quality professional judgment. In recent years, KPMG (Ranzilla, Chevalier, Herrmann, Glover, and Prawitt 2011) and the Committee of Sponsoring Organizations of the Treadway Commission (KPMG, Glover, and Prawitt 2012) addressed this gap at the corporate level by publishing guidance for accounting professionals and board members on how to identify and mitigate common judgment biases, yet there remain few resources designed for accounting students. This collection of exercises enables instructors to introduce the topic of effective JDM in the classroom. It provides students with the opportunity to identify bias in their own judgments by highlighting five frequently occurring biases that adversely impact business judgments (i.e., availability, anchoring, overconfidence, confirmation, and rush to solve). This compendium gathers exercises from psychology literature that may be used to pique student interest and encourage discussion of how each bias impacts judgments made by accounting professionals and how individuals may reduce their impact.