Judgment And Decision Making Research Research Articles

Auditors’ Work Attitudes: Translating Auditor JDM Research Findings to Inform Audit Firms’ Strategies

SYNOPSIS Audit firms are undertaking tremendous efforts to improve auditors’ work attitudes as one approach to tackling talent shortages. We present an auditors’ work attitudes framework to help practitioners identify relevant research from auditor judgment and decision-making (JDM) studies and to translate these findings for application to practice. Practitioners might overlook auditor JDM research because it tends to focus on individual auditor tasks and performance outcomes rather than firm-wide practices. Nonetheless, it may serve as a relevant source of evidence to inform firms’ strategies. We use illustrative examples of auditor JDM studies to demonstrate how firms can apply our auditors’ work attitudes framework to firm initiatives, such as employee surveys and audit work designs. Our framework also helps researchers identify gaps in scholarly work on auditors’ work attitudes.

Virtuous opinion change in structured groups

Abstract Although the individual has been the focus of most research into judgment and decision-making (JDM), important decisions in the real world are often made collectively rather than individually, a tendency that has increased in recent times with the opportunities for easy information exchange through the Internet. From this perspective, JDM research that factors in this social context has increased generalizability and mundane realism relative to that which ignores it. We delineate a problem-space for research within which we locate protocols that are used to study or support collective JDM, identify a common research question posed by all of these protocols—‘What are the factors leading to opinion change for the better (‘virtuous opinion change’) in individual JDM agents?’—and propose a modeling approach and research paradigm using structured groups (i.e., groups with some constraints on their interaction), for answering this question. This paradigm, based on that used in studies of judge-adviser systems, avoids the need for real interacting groups and their attendant logistical problems, lack of power, and poor experimental control. We report an experiment using our paradigm on the effects of group size and opinion diversity on judgmental forecasting performance to illustrate our approach. The study found a U-shaped effect of group size on the probability of opinion change, but no effect on the amount of virtuous opinion change. Implications of our approach for development of more externally valid empirical studies and theories of JDM, and for the design of structured-group techniques to support collective JDM, are discussed.

Norms for Behavioral Change (NBC) model: How injunctive norms and enforcement shift descriptive norms in science

In this article, we introduce the Norms for Behavior Change model (NBC) to explain how injunctive norms coupled with enforcement promote community-level behavior change. We examine the NBC model in the context of open science. We conceptualize journal submission requirements as injunctive norms, and the shift towards open science as a profound change in descriptive norms of publishing for communities of scholars. We conducted two pilot studies and three main studies to examine the uneven adoption of open science practices across different behavioral sciences, which include Organizational Behavior (OB), Judgment and Decision Making (JDM), and psychology. In our first pilot study, we identify how actual injunctive norms about open science are particularly weak in OB because the majority of OB journals do not have explicit requirements for open science. In our second pilot study, we find that a substantial proportion of OB faculty view open science to be unhelpful for advancing the field. In Study 1, we survey OB faculty and JDM faculty, and find that OB faculty perceive injunctive and descriptive norms of publishing as less likely to include open science practices compared to JDM faculty. In Study 2, we code open science practices across OB and psychology journals in an archival data set, and demonstrate that the actual descriptive norms of publishing are less likely to adhere to open science practices in OB journals than psychology journals (where JDM researchers publish). In Study 3, we analyze an archival data set of preregistrations onaspredicted.org, and find that actual descriptive norms of open science are more likely to be adopted by experimentalists than non-experimentalists. Taken together, our work establishes the link between norms and behavioral change, and provides prescriptive advice on how to leverage injunctive norms to shift descriptive norms towards constructive community-level behaviors.

Using LIWC to Analyze Participants' Psychological Processing in Accounting JDM Research

SUMMARY This paper provides methodological guidance for judgment and decision-making (JDM) researchers in accounting who are interested in using the Linguistic Inquiry and Word Count (LIWC) text analysis program to analyze research participants' written responses to open-ended questions. We discuss how LIWC's measures of psychological constructs were developed and validated in psycholinguistic research. We then use data from an audit JDM study to illustrate the use of LIWC to guide researchers in identifying suitable measures, performing quality control procedures, and reporting the analysis. We also discuss research design considerations that will strengthen the inferences drawn from LIWC analysis. The paper concludes with examples where LIWC analysis has the potential to reveal participants' deep, complex, effortful psychological processing and affective states from their written responses.

Comparing Assessment Methods of Attribute Importance in Teachers’ Decisions: The Importance of Different Criteria for Tracking Recommendations after Primary School

The importance of different criteria for tracking recommendations is usually inferred using regression weights as a cross-student measure. The few studies that have applied alternative approaches or differentiated between student groups sometimes reach different conclusions. According to research on judgment and decision making (JDM), different methods operationalize different facets of importance. Given this, we investigate whether the importance of criteria for tracking recommendations depends on a direct vs. indirect operationalization (regression weights vs. ratings). A total of 181 teachers selected four students from their most recent fourth-grade class using a 2 × 2 design (certain vs. uncertain qualification for the Realschule (vocational track) vs. the Gymnasium (academic track)). Then, they reported on the level and the importance of predetermined criteria for each student. Contrary to JDM research, we found few method-related differences, but striking differences between cases with a certain vs. an uncertain qualification. For the latter, the importance of the criteria is more homogeneous, the regression prediction is less successful and the importance varies with the dependent variable in the regression (actual recommendation vs. perceived qualification). We conclude that further research should focus on uncertain cases rather than method-related differences and suspect that, in uncertain cases, the formation of the recommendation is a multistage decision process.

Group Judgment and Decision Making in Auditing: Research in the Time of COVID-19 and Beyond

SUMMARY The COVID-19 pandemic has fundamentally changed how auditors work and interact with team members and others in the financial reporting process. In particular, there has been a move away from face-to-face interactions to the use of virtual teams, with strong indications many of these changes will remain post-pandemic. We examine the impacts of the pandemic on group judgment and decision making (JDM) research in auditing by reviewing research on auditor interactions with respect to the review process (including coaching), fraud brainstorming, consultations within audit firms, and parties outside the audit firm such as client management and the audit committee. Through the pandemic lens and for each auditor interaction, we consider new research questions for audit JDM researchers to investigate and new ways of addressing existing research questions given these fundamental changes. We also identify potential impacts on research methods used to address these questions during the pandemic and beyond.

External Auditors' Judgment and Decision Making: An Audit Process Task Analysis

AbstractThis manuscript reviews the external auditor judgment and decision making (JDM) literature from the past decade by specific tasks in the auditing process. Decomposing the literature review by audit task was chosen to enable audit and behavioral researchers and graduate students to identify the trends of JDM research subsequent to Nelson and Tan's () literature review. In addition to identifying gaps/omissions in the current literature, suggestions for future research are also advanced based on forthcoming transformations in the auditing institutional environment.

Maximizing the Contribution of JDM-Style Experiments in Accounting

This paper considers the use of Judgment and Decision Making (JDM) experiments in accounting. It begins with a description of the purpose and goal of JDM experiments in accounting. The bulk of the paper discusses critical issues in designing and implementing JDM-style experiments. Our primary goal is to provide advice about designing and implementing JDM-style experiments in ways that will maximize a study’s likelihood of success and its contribution to the accounting literature. We identify five steps that will help JDM researchers identify meaningful research questions and address them in ways that allow generalization to the problem of interest and beyond. A key theme is that impactful research requires significant planning and pre-work.

How National Culture Influences Judgment and Decision Making (JDM)

Research using a variety of frameworks has shown that national culture and the values they espouse influence workplace behaviours, attitudes, and other organizational outcomes. (Kirkman, Lowe, and Gibson, 2006). Other frameworks used in studies relating national culture and workplace behaviours, attitudes, and other organizational outcomes include, Kluckhohn and Strodtbeck (1961), Hall (1976), Trompenaars (1993), Schwartz (1994), and Ronen and Shenkar (1985). The most influential of these frameworks is that of Hofstede (1980 and 2001), and it has had by far the greatest impact in studies relating national cultural values to workplace behaviours, attitudes, and other organizational outcomes. (Sivakumar & Nakata, 2001). For example, the Social Science Citations Index (SSCI) indicates that Hofstede’s work is more widely cited than others (cited 1,800 times through 1999). (Hofstede, www1980 and 2001). Trompenaars (1993), who has a competing framework, credits Hofstede for ‘opening management’s eyes to the importance of the [cross-cultural management] subject’.In Part A of this essay, the details of Bonner’s model for JDM research is evaluated in terms of the role national culture plays in the JDM quality of Accounting Professionals, and suggestions are made to enhance Bonner’s Model to better incorporate different national cultural perspectives.In Part B a comparison is made between the accounting scandal involving Bernard Madoff in his firm in the United States of America, and the accounting scandal in Olympus Corporation of Japan. In the process the JDM assessment differences, which could be attributed to cultural differences between the United States of America and Japan, are discussed.Finally in Part C an evaluation is made of the impact of national culture in a globalized decision making environment; what implications there might be for judgment and decision making in such a globalized decision making environment; how appropriate the model espoused by Hofstede (1980 and 2001) is when evaluating the potential national culture impact on JDM quality according to Bonner’s model; and what recommendations can be made to account for national cultural influences in JDM quality assessments.

How Insights from the “New” JDM Research Can Improve Auditor Judgment: Fundamental Research Questions and Methodological Advice

SUMMARYWe examine recent developments in judgment and decision-making (JDM) research to provide insight into how two big ideas in this area can be leveraged as overlapping frameworks to examine and improve auditor judgment. The ideas are (1) that human thinking and reasoning can be characterized by a dual-process model and (2) that conscious and nonconscious goals drive cognition. Despite that these ideas are well established in the broader JDM literature and have great promise for improving auditor judgment, we observe minimal use of them in the audit JDM literature. Thus, we briefly outline these ideas, and we develop fundamental, high-level research questions related to audit JDM research that are based on these ideas. Finally, we provide guidance for designing and evaluating experiments that effectively use these frameworks, whether in auditing or other rich decision-making contexts. The frameworks can help researchers improve audit quality by enhancing our understanding of auditors' judgment processes and the factors that influence them, by allowing for new ways of thinking about how to improve auditor judgment, and by suggesting new interventions for improving auditor judgment.

Judgment and Decision-Making Research in Auditing and Accounting: Future Research Implications of Person, Task, and Environment Perspective

The discipline of accounting and auditing has increasingly recognized judgment and decision making (JDM) as highly important attributes in the profession because individuals such as managers, auditors, financial analysts, accountants, and standard setters make pivotal judgments and decisions. Many studies undertaken in this domain of research also substantiate the significance of JDM in accounting and auditing. This study evaluates all the papers published in 10 accounting journals among the leading ones from 1980 to 2010 that fall within the domain of JDM research. The categorization of the studies reviewed in this paper is based on Bonner's (1999) three major determinants of JDM: Person, Task, and Environment variables. The review highlights the progress in the literature over the past three decades and also identifies the methodological limitations of previous research. The identified limitations will be useful for improving the research method of future JDM studies in accounting and auditing. The review also draws inferences on how JDM research in auditing, which is well established, could usefully guide future JDM research in financial accounting.

Effects of Differences in National Culture on Auditors' Judgments and Decisions: A Literature Review of Cross-Cultural Auditing Studies from a Judgment and Decision Making Perspective

SUMMARY: Motivated by the growing cultural diversity of new hires in audit firms, this paper reviews the literature on cross-cultural differences in auditors' judgment and decision making (JDM). The overarching aim of the review is to summarize the current state of knowledge and compare our understanding of cross-cultural auditors' JDM with the broader cross-cultural JDM research in psychology to stimulate applied research. We develop a framework that categorizes those auditor judgments and decisions most likely affected by cross-cultural differences. The categories include auditors' confidence, risk and probability judgments, risk decisions, conflict decisions, and ethical judgments. We contribute to the cross-cultural audit research in four ways. First, we provide a framework by which future research can be synthesized within auditing and compared with psychology. Second, we recommend specific research questions to respond to both the gaps in extant literature and the changing multicultural environment of audit firms. Third, we advocate for an alternative theoretical approach beyond the examination of cultural traits. Finally, we argue that bicultural auditors represent an unexplored boundary condition on prior findings that warrants more immediate attention from audit researchers.

A Brief History of Decision-Making Research in Accounting

This paper provides a sketch of the most important milestones of behavioral accounting in general and judgment and decision-making (JDM) research in accounting in particular, over the last six decades. In order to understand JDM research in accounting it is important to know how “behavioral” aspects were introduced into the accounting community. Thus, this integrative literature review, combined with a citation analysis of the current research streams, analyses the last six decades of behavioral accounting research. This paper offers a compact description of how theories and methodologies from social sciences, in particular from the field of psychology, were implemented into accounting research. This paper extends previous general reviews (e.g. Bonner, 1999; Dunk, 2001; Trotman, Tan, & Ang, 2011) and more personal reflections (e.g., Hopwood, 2009; M. D. Shields, 2009) , as it also includes a discussion of emerging themes (e.g. ecological rationality) and methods (e.g. neuroaccounting) and how these approaches are (or are not) picked up in behavioral accounting. Overall, this paper provides a starting point for scholars interested in the foundations of behavioral accounting and in the current trends and debates in JDM research in accounting.

Herbert Simon’s spell on judgment and decision making

AbstractHow many judgment and decision making (JDM) researchers have not claimed to be building on Herbert Simon’s work? We identify two of Simon’s goals for JDM research: He sought to understand people’s decision processes—the descriptive goal—and studied whether thesameprocesses lead to good decisions—the prescriptive goal. To investigate how recent JDM research relates to these goals, we analyzed the articles published in theJournal of Behavioral Decision Makingand inJudgment and Decision Makingfrom 2006 to 2010. Out of 377 articles, 91 cite Simon or we judged them as directly relating to his goals. We asked whether these articles areintegrative, in the following sense: For a descriptive article we asked if it contributes to building a theory thatreconcilesdifferent conceptualizations of cognition such as neural networks and heuristics. For a prescriptive article we asked if it contributes to building a method thatcombinesideas of other methods such as heuristics and optimization models. Based on our subjective judgments we found that the proportion of integrative articles was 67% of the prescriptive and 52% of the descriptive articles. We offer suggestions for achieving more integration of JDM theories. The article concludes with the thesis that although JDM researchers work under Simon’s spell, no one really knows what that spell is.

Is there evidence of publication biases in JDM research?

AbstractIt is a long known problem that the preferential publication of statistically significant results (publication bias) may lead to incorrect estimates of the true effects being investigated. Even though other research areas (e.g., medicine, biology) are aware of the problem, and have identified strong publication biases, researchers in judgment and decision making (JDM) largely ignore it. We reanalyzed two current meta-analyses in this area. Both showed evidence of publication biases that may have led to a substantial overestimation of the true effects they investigated. A review of additional JDM meta-analyses shows that most meta-analyses conducted no or insufficient analyses of publication bias. However, given our results and the rareness of non-significant effects in the literature, we suspect that biases occur quite often. These findings suggest that (a) conclusions based on meta-analyses without reported tests of publication bias should be interpreted with caution and (b) publication policies and standard research practices should be revised to overcome the problem.

The Decision Making Individual Differences Inventory and guidelines for the study of individual differences in judgment and decision-making research

AbstractIndividual differences in decision making are a topic of longstanding interest, but often yield inconsistent and contradictory results. After providing an overview of individual difference measures that have commonly been used in judgment and decision-making (JDM) research, we suggest that our understanding of individual difference effects in JDM may be improved by amending our approach to studying them. We propose four recommendations for improving the pursuit of individual differences in JDM research: a more systematic approach; more theory-driven selection of measures; a reduced emphasis on main effects in favor of interactions between individual differences and decision features, situational factors, and other individual differences; and more extensive communication of results (whether significant or null, published or unpublished). As a first step, we offer our database—the Decision Making Individual Differences Inventory (DMIDI;http://html://www.sjdm.org/dmidi), a free, public resource that categorizes and describes the most common individual difference measures used in JDM research.

Fifty-year overview of judgment and decision-making research in accounting

As part of the celebration of the fiftieth anniversary of AFAANZ, we consider the breadth of judgment and decision-making (JDM) experimental research in accounting over that 50-year period. Our review is divided by decade and between auditing, financial accounting and management accounting. In four major journals, we found 5745 papers between 1970 and 2009, which we consider impressive and strong support for the opportunity to publish in this field. Our aim is to encourage more JDM research from Australians and New Zealanders, and to allow researchers in particular specialisations to get a better understanding of the JDM research in other specialisations.

What If Industrial–Organizational Psychology Decided to Take Workplace Decisions Seriously?

The major premise of this article is that increased exposure to—and increased application of—theories, methods, and findings from the judgment and decision-making (JDM) field will aid industrial–organizational psychology and organizational behavior (IOOB) researchers and practitioners in studying workplace decisions. To this end, we first provide evidence of the lack of cross-fertilization between JDM and IOOB and then provide an overview of the JDM research literature. Next, with the aid of a panel of prominent IOOB scholars who share JDM interests, we discuss the philosophical and methodological traditions in IOOB and JDM, the areas in which IOOB has already been enriched by JDM as well as the areas in which it might be further enriched in the future, ways of increasing cross-fertilization from JDM to IOOB, and ways in which IOOB can in turn contribute to JDM. Through this focal article, we hope to spark conversation and ultimately engender more cross-fertilization between JDM and IOOB.

Mindful Judgment and Decision Making

A full range of psychological processes has been put into play to explain judgment and choice phenomena. Complementing work on attention, information integration, and learning, decision research over the past 10 years has also examined the effects of goals, mental representation, and memory processes. In addition to deliberative processes, automatic processes have gotten closer attention, and the emotions revolution has put affective processes on a footing equal to cognitive ones. Psychological process models provide natural predictions about individual differences and lifespan changes and integrate across judgment and decision making (JDM) phenomena. "Mindful" JDM research leverages our knowledge about psychological processes into causal explanations for important judgment and choice regularities, emphasizing the adaptive use of an abundance of processing alternatives. Such explanations supplement and support existing mathematical descriptions of phenomena such as loss aversion or hyperbolic discounting. Unlike such descriptions, they also provide entry points for interventions designed to help people overcome judgments or choices considered undesirable.

The relevance of judgment and decision making research for marketing: Introduction to the special issue

Research in judgment and decision making (JDM) endeavors to account for the way individuals make complex decisions, such as those consumers make in the marketplace. This complexity is created by the number of options available, the numerous attributes on which options can be evaluated, and the difficulty of making tradeoffs between these attributes. This article addresses some of the strategies, both functional and dysfunctional, that people adopt to cope with this complexity. It goes on to describe the most recent contributions of JDM researchers to the practice and theory of marketing.