Presence Of Incentives Research Articles

Ensuring sustainability of community participation in locally-managed marine protected area in north-western Cagayan, Philippines

The establishment of marine protected areas (MPAs) by the local or national government is a popular conservation tool in the Philippines. Participation among community members is an important consideration for the success of its implementation. While remarkable community involvement is observed during planning and establishment of MPAs, sustaining this voluntary participation is a challenge in the implementation stage. To ensure sustainability of participation, this paper investigates the socio-economic conditions and factors that influence the participation of villagers using the probit model taking the case of a locally-managed MPA in north-western Cagayan, Philippines. The results of the study showed that participation is affected by socio-economic and demographic factors (income, age, gender, household size), fishing characteristics (gears and boat ownership), the presence of incentives (livelihood projects and payao), and the manifestation of leadership (village leaders). The findings of the study could be used to increase the tendency of a community to participate in MPA management by instituting policies geared towards sustaining their involvement.

Legal provision of sustainable development as a condition for rational use of land

The article examines the theoretical and legal approaches to the rational use of land in terms of sustainable development. the use of land resources should be carried out within the concept of sustainable development, which is recognized as the dominant ideology of civilization in the XXI century, and is designed to ensure the needs of citizens while preserving natural resources and acceptable environmental conditions. Land reform, as part of the economic reform aimed at land redistribution, unfortunately did not cover the full range of legal relations related to both land protection and rational use.
 Under such conditions, it is proposed to review the existing legal approaches to the rational use of land and its protection in order to develop general principles for the rational use of land, taking into account the goals of sustainable development. The mechanism of legal regulation of rational use of lands through a prism of maintenance of sustainable development is offered. In particular, the legal criteria for the rational use of land resources should be to ensure their inexhaustibility and environmental friendliness of operation while ensuring sustainable development, subject to a number of factors due to a combination of public and private interests. The author substantiates that the main form of land use should be the right of ownership, which determines the personal interest in obtaining a stable income and preserving and improving land as an attractive investment resource; implementation of management functions related to land protection on the basis of public-private partnership, which will provide the possibility of self-control by the owner over the condition and properties of land, the presence of incentive and punitive mechanisms, provided an effective state control service in land protection. Accordingly, rational land use in the context of sustainable development will involve the constant receipt of the greatest possible amount of vital benefits, provided that land resources are kept unchanged or improved.
 The need to use land in accordance with their functional purpose as a place, condition, and source of human life determines the content of legal regulation in the context of sustainable development. The multifunctional purpose of the land creates conditions for human life, and therefore requires clear legal mechanisms that will ensure the safety and sufficient living standards of people when using land in various legal titles, the primary among which is land ownership. All other legal forms are derivative and are usually limited in time, so it is the owner who is primarily responsible for ensuring the quality of land use, which covering the full range of their functional purpose will ensure consistency, and in some cases improve the properties of this a unique natural resource.
 At present, there is an objective need to implement appropriate legal structures on the content of domestic regulations on land ownership in order to achieve sustainable development, which provides for mutual satisfaction of public and private interests in the use, preservation and protection of land. After all, land as an object of property rights according to the constitutional norm always remains a national property, and therefore its use should take place by satisfying both private and public interests, which is to preserve and restore soil quality, increase their fertility, produce quality agricultural products, in accordance with established standards; ensuring the preservation of natural objects, landscape environment, the territorial base of which is a particular land plot of the relevant purpose; ensuring free access to natural recreational, health aesthetic facilities used for the right of general nature use.

Analysis of financial and carbon savings of grid-tied home energy systems in conjunction with photo-voltaic solar generation and electric vehicle use

The general downward trend of the costs of both battery and solar technologies has helped lead to their increased adoption on both utility and residential levels. These decreasing costs combined with the relative ubiquity of solar power presents a significant opportunity for homeowners to not only reduce their overall electric bill but their carbon footprint by pairing solar generation with home energy systems (HES). By incorporating HES, consumers are able “peak shave” to take advantage of favorable Time-of-Use electricity rates as well as capture excess power generated by solar panels that would otherwise be sent back to the grid as part of a net metering agreement or sold back at the “avoided cost” rate, which is often times unfavorable. Depending on the scale of said system, the consumer can significantly reduce their carbon footprint, or in some cases offset it entirely, even more so if they use an electric vehicle (EV). These carbon savings, in the presence of incentives, can also provide greater financial benefit in addition to the electricity cost savings. The overall cost and CO2 savings associated with installing such a system is a function of a variety of factors such as the solar availability, house load, incentives, rates, and the grid mix (coal, wind, nuclear, etc). All of these factors are regional; thus analyses of these systems must be done on a regional basis. In this paper, we model these systems using data from several regions across the United States and quantity the financial viability of these systems as well as their environmental benefit as measured by CO2 emissions reductions. As will be shown, the benefits differ depending on region as well as the time-of-use rate schemes deployed by different utility companies. It is hoped that yielding favorable results in both of these metrics will accelerate adoption of these systems and assist in the mitigation of climate change.

Towards the Political Economy of Scientific and Technological Development (on Russian Example).

The article identifies the key problems of the development of innovative economics in Russia. One of the key and large-scale problems is the weak commercialization of innovations created with budget funds: there are many inventions, but few innovations. At present, there is also a problem of scientific migration in Russia: a significant number of scientists leave the country, thereby subsidizing the scientific and technological development of other states. The key reason for this state of affairs is the lack of the necessary institutional infrastructure. The willingness to solve the identified problems is closely related to the availability of competencies - not only scientific, but also organizational, as well as the presence of incentives,including incentives associated with the costs of innovations - not only in terms of obtaining the necessary knowledge and necessary for their implementation in the production process resources, but also to overcome the resistance of those who lose from innovation. That is why, in order to assess the possibility of a scientific and technological turn, it is necessary to understand what the forces of resistance are, as well as the organizational potential of groups, presumably ready to solve problems.

A Changing Climate for Knowledge Generation in Agriculture: Lessons to Institutionalize Science-Policy Engagement

Effective science-policy engagement efforts are crucial to accelerate climate action. Such efforts should be underpinned by high-quality knowledge generation that enhances salience, credibility and legitimacy of research results. This is particularly important for the agricultural sector. Agriculture has been identified as a priority for climate action. The sector also constitutes well-established institutions set up to help achieve food and nutrition security. Institutionalizing high quality knowledge generation for climate change adaptation within these institutions presents a major opportunity to catalyze climate action within the sector. To contribute to insights about this institutionalization, we draw on and develop Cash et al.'s 2002 success conditions for enhancing salience, credibility and legitimacy: (1) increased accountability, (2) use of boundary objects, (3) participation across the boundary, (4) mediation and a selectively permeable boundary, (5) translation, and (6) coordination and complementary expertise. We examine how these success conditions apply in a major global case of agricultural research for development under climate change: the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). We explore these success conditions in the wider context of CGIAR reform and response to climate change as the international system for Agricultural Research for Development (AR4D). Our results specify and confirm the practical relevance of the six success conditions for institutional design and reform, but also point to the need to complement these with two inductively-derived success conditions: effective leadership and presence of incentives. To institutionalize these success conditions among AR4D institutions, there is an urgent need to create a conducive environment that enables the development of context-specific science-policy engagement strategies, along with leadership development and efforts to break traditional disciplinary silos which constrain user-oriented knowledge production.

THE ROLE OF THE INTERNAL AUDITOR IN INCREASING THE EFFECTIVENESS OF ENVIRONMENTAL PERFORMANCE TO ACHIEVE ECONOMIC DEVELOPMENT A FIELD STUDY ON SOME OIL COMPANIES

The study aims to study the thesis to determine the role of the internal auditor and to explain the impact of this on the effectiveness of environmental performance to achieve the goals of economic development, and the study was conducted on a sample of (100) workers from the oil sector companies in the Arab Republic of Egypt and statistical analysis was used in order to ensure the validity of the study hypotheses . The study reached the following results: • There is a significant relationship with statistical significance between activating the internal auditor's role and his environmental auditing and risks, and the first hypothesis was accepted. • There is a significant relationship with statistical significance between the role of the internal auditor and increasing the effectiveness of environmental performance. The second hypothesis was accepted. • There is a significant relationship with statistical significance between increasing the effectiveness of environmental performance and achieving economic development goals, and the third hypothesis was accepted. • There is a significant relationship with statistical significance between the role of the internal auditor as an independent variable and between increasing the effectiveness of environmental performance as an intermediate variable and achieving economic development goals as a dependent variable, and the fourth hypothesis was accepted. • There is a significant relationship with statistical significance between the academic Scientific and practical qualification of internal auditors and achieving sustainable development, and the fifth hypothesis was accepted. The most important recommendations of the researcher include the following: Among the most important recommendations that researchers offer are the following: The results showed the positive impact of the role of the internal auditor in increasing the effectiveness of the environmental performance, which is reflected positively on the goals of economic development. Therefore, the researcher recommends activating the role of the internal auditor in oil companies by following the following: • The internal audit performance must be developed to activate its role in environmental performance auditing. • We recommend the independence of the internal audit and its reporting to the Board of Directors to rely on the objectivity it assesses and the reports it provides on actual performance. • The researcher recommends continuous evaluation of the effectiveness of environmental performance by internal review. • The researcher recommends enabling the effectiveness of environmental performance to improve the level of the international classification for Egypt. • The researcher recommends the interest of oil companies to develop workers in the internal audit scientifically and to upgrade their educational qualifications and the presence of incentives and participation from the company in completing its scientific path.

Confidence in Context: Perceived Accuracy of Quantitative Estimates Decreases With Repeated Trials

Across seven studies (combined N = 5,484), we demonstrated that confidence in one’s judgments decreases over a series of quantitative estimates. This finding was robust to various methods of confidence elicitation, the presence of incentives, and different estimation topics (Studies 1, 2, and 4). Our results also stand in contrast to participant expectations (Study 3). The phenomenon does not appear to be driven by fatigue, lack of effort, or various explanations based on incorporating uncertainty from prior judgments into subsequent ones. Our findings suggest that rather than evaluating confidence in isolation, participants evaluate confidence in reference to their stated confidence on earlier judgments. We theorize that confidence in earlier judgments increases in hindsight because of biased forgetting of disconfirming evidence. As a result, confidence in subsequent judgments appears to be comparatively lower (preregistered Studies 5–7). We discuss the implications for confidence research and consumer, organizational, and policy decision-making.

A Preliminary Environmental Assessment of Epoxidized Sucrose Soyate (ESS)-Based Biocomposite.

Biocomposites can be both environmentally and economically beneficial: during their life cycle they generally use and generate less petroleum-based carbon, and when produced from the byproduct of another industry or recycled back to the manufacturing process, they will bring additional economic benefits through contributing to a circular economy. Here we investigate and compare the environmental performance of a biocomposite composed of a soybean oil-based resin (epoxidized sucrose soyate) and flax-based reinforcement using life cycle assessment (LCA) methodology. We evaluate the main environmental impacts that are generated during the production of the bio-based resin used in the biocomposite, as well as the biocomposite itself. We compare the life cycle impacts of the proposed biocomposite to a functionally similar petroleum-based resin and flax fiber reinforced composite, to identify tradeoffs between the environmental performance of the two products. We demonstrate that the bio-based resin (epoxidized sucrose soyate) compared to a conventional (bisphenol A-based) resin shows lower negative environmental impacts in most studied categories. When comparing the biocomposite to the fossil fuel derived composite, it is demonstrated that using epoxidized sucrose soyate versus a bisphenol A (BPA)-based epoxy resin can improve the environmental performance of the composite in most categories except eutrophication and ozone layer depletion. For future designs, considering an alternative cross-linker to facilitate the bond between the bio-based resin and the flax fiber, may help improve the overall environmental performance of the biocomposite. An uncertainty analysis was also performed to evaluate the effect of variation in LCA model inputs on the environmental results for both the biocomposite and composite. The findings show a better overall carbon footprint for the biocomposite compared to the BPA-based composite at almost all times, demonstrating a good potential for marketability especially in the presence of incentives or regulations that address reducing the carbon intensity of products. This analysis allowed us to pinpoint hotspots in the biocomposite’s supply chain and recommend future modifications to improve the product’s sustainability.

30 Years of soft interventions to reduce car use – A systematic review and meta-analysis

Soft travel interventions are generally regarded as effective measures for reducing personal car use. However, doubts about the validity of such claims are raised, primarily fueled by the low methodological quality of evaluation studies upon which such conclusions are based and by the fact that the literature is, for the most part, narratively synthesized. The present systematic review addresses these critiques by investigating the effect of soft interventions on car use through a meta-analysis, which includes only experimental and well-controlled quasi-experimental studies. Results revealed that interventions (k = 41) lead to a significant reduction of 7% in car modal split share (Hedges’ g = 0.163). Moderators of interventions’ effectiveness were investigated in a meta-regression. Effectiveness was moderated by the type of intervention and by the main psychological variable targeted by the interventions, whereas the other studied moderators (i.e. residential relocation of participants, study design, percentage of females in the study, the presence of incentives, passed time to follow-up, interventions’ measurement instrument, city size in which interventions were applied and the setting where they were conducted) were non-significant. Limitations of the present findings, together with implications for policy and practice are discussed.

A Comment on Effects of Economic Incentives in the American Film Industry: An Ecological Approach

O’Brien and Lane (2018) examines the popular use of film industry incentives by US states to promote economic growth. The authors claim that their findings indicate the presence of incentives is positively associated with filming, industry employment, and new industry establishments, which is inconsistent with other studies on the subject. This comment raises concerns regarding the data used to generate the estimates, which cast doubt on the veracity of the empirical findings.

Comparative analysis of government incentives and game structures on single and two-period green supply chain

The Government organizations provide incentives to the manufacturers for adopting green technologies in different ways. The objective of this study is to generate a decision support framework in perspectives of the selection and successful implementation towards environment-friendly products by comparing profits of each member, greening level, consumer surplus and environmental improvement under two different incentive policies. Twelve analytical models are formulated and analyzed by considering the impact of two game structures, single and two-period procurement decisions on the sustainability goals of supply chain members. The objectives of government's social welfare are optimized here. A comprehensive analysis reveals that the manufacturer receives higher profits and the greening level is always at higher end in two-period procurement decision under manufacturer-Stackelberg game. The greening level and profit of the retailer are maximum in single-period procurement decision under retailer-Stackelberg game. As a result, optimal preference is highly sensitive to game structure and procurement decision. When the manufacturer sets a premeditated threshold for greening level, supply chain members receive higher profits under incentive policy on per-unit product because of lower sales price, higher consumer surplus and environmental improvement compared to government incentive policy on total investment in R&D. The greening level is maximum under incentive policy on total investment in R&D that results in higher environmental improvement. Supply chain members can compromise with their sustainable goals to receive higher profits in presence of incentives.

Money that Costs Too Much: Regulating Financial Incentives

Money may not corrupt. But should we worry if it corrodes? Legal scholars in a range of fields have expressed concern about “motivational crowding-out,” a process by which offering financial rewards for good behavior may undermine laudable social motivations, like professionalism or civic duty. Disquiet about the motivational impacts of incentives has now extended to health law, employment law, tax, torts, contracts, criminal law, property, and beyond. In some cases, the fear of crowding-out has inspired concrete opposition to innovative policies that marshal incentives to change individual behavior. But to date, our fears about crowding-out have been unfocused and amorphous; our field lacks the language we need to speak precisely about these behavioral phenomena, and we have not examined when and why motivational crowding-out should prompt us to discontinue or temper incentive based schemes. Without a clear and nuanced picture of the processes, harms, and benefits of crowding-out, we may well be missing the mark. This Article canvasses the range of legal areas where crowding-out concerns arise, and it newly illuminates the specific harms that may be attributable to crowding-out effects. These hazards include reduced autonomy in the presence of incentives, a distinct set of behavioral inefficiencies, and the potential degradation of individual or social values. But this Article also challenges the view of crowding out as uniformly harmful, offering an alternative vision of potential crowding-out benefits, such as crowding out invidious motivations, increasing the predictability of agent activity, and bolstering the efficiency of future incentives. These benefits suggest that the precautionary principle, which would counsel against using incentives where crowding-out is possible—is inappropriate for this field. The Article also proposes a novel taxonomy to help guide regulatory responses to incentives that cause crowding-out. Different categories of incentives present different justifications for regulatory intervention and redesign, including autonomy concerns, efficiency concerns, and negative externalities imposed on third parties. By organizing incentives based on the relationship between the principal and agent, we can identify opportunities for regulators and incentive architects to redesign or limit incentive programs, to leave incentives in place, or to consider discontinuing incentive-based policies when money indeed “costs too much” in motivation.

Many face(t)s of young people’s risk-taking: Individual and situational determinants

BackgroundAdolescence and young adulthood are frequently characterised by a strong propensity to take risks. Yet, empirical data shows that personality traits, type and features of risk measures, or presence of additional incentives can significantly influence one’s risk-taking tendency. Our aim was to investigate young people’s risk-taking and point out when and how individual and situational factors may increase or decrease their risk-taking propensity.Participants and procedureParticipants were adolescents and emerging adults (N = 173, age range: 13-30). Each completed two behavioural risk measures (“hot” and “cold” decision tasks) in two conditions, with or without financial incentives. Questionnaires assessing self-declared risk-taking, sensation seeking, and impulsivity were also used. Statistical analyses were conducted with gender and age as additional factors.ResultsIn “hot” risk tasks all participants risked the same, while the tendency to take risks in “cold” tasks was higher for older participants, especially in the presence of incentives. Males risked more than females, apart from “hot” incentivised tasks where no gender differences were found. Sensation seeking and impulsivity were significant predictors of risk-taking in “hot” incentivised tasks, while performance in “cold” non-incentivised tasks depended on sensation seeking only.ConclusionsOur results show that risk-taking is not a unitary phenomenon, and young people are not universal risk-takers. Certain personality traits seem to predispose this group to taking risks, but only in some circumstances (e.g. “hot” decisions). Factors such as task context or additional incentives can not only increase but also decrease risk-taking in young people, resulting in more caution on their behalf.

Motor cortex inhibition by TMS reduces cognitive non-motor procedural learning when immediate incentives are present

Inhibitory repetitive transcranial magnetic stimulation (rTMS) of the primary motor area (M1) impairs motor sequence-learning, but not basic motor function. It is unknown if this is specific for motor forms of procedural learning or a more general effect. To investigate, we tested the effect of M1-inhibition on the weather prediction task (WPT), a learning task with minimal motor learning component. In the WPT, participants learn arbitrary, probabilistic, associations between sets of meaningless cues and fictional outcomes. In our “Feedback” (FB) condition, they received monetary rewards/punishments during learning. In the “paired associate” (PA) condition they learned the same information by passive observation of associations. The observational and feedback learning conditions were matched for their non-learning-specific motor demands.In each of two FB or PA sessions, we delivered Real (inhibitory) or Sham continuous theta-burst (cTBS) to the left-M1, before 150 training-trials. We then tested learning with 42 trials without feedback immediately after learning and again 1-h after cTBS. Compared to Sham, Real cTBS reduced performance during FB-learning, when learning was immediately reinforced, but not when knowledge was tested after PA learning. Furthermore, when FB-based memory was tested after learning without immediate incentive, there was no effect of TMS compared to post-PA test performance, showing the TMS effect operated only in the presence of incentive and feedback. We conclude that M1 is a node in a network underlying feedback-driven procedural learning and inhibitory rTMS there results in decreased network efficiency.

The effect of pyramidal structures on earnings management: Evidence from Italian listed companies

In recent years, business administration researchers and economic operators have become increasingly interested in ways to protect minority shareholders from opportunistic behaviour by the majority shareholders in control of company management. Scholars have further extended their attention to the systems of Corporate Governance after the failures and financial scandals involving some important international groups such as Enron (United States), Parmalat, and Giacomelli (Italy). These events have focused attention on the opportunistic use of technical discretion when drawing up financial information in the presence of incentives or subsidies linked to the expropriation of potential wealth generated through the Corporate Governance structure adopted by companies. Against this background of applying emphasis to the information included in financial statements as an important tool for the management of Corporate Governance conflicts, this paper intends to analyses the relationship between the practices of earnings management and the adoption of a pyramidal group structure within the Italian financial market. In particular, the contribution aims to prove whether earnings manipulation practices have been adopted with a higher frequency and a greater intensity within the listed pyramidal groups as well as whether any statistical relationships exist between the pyramidal structure and the earnings management phenomenon.

Adolescents let sufficient evidence accumulate before making a decision when large incentives are at stake

Adolescent decision-making has been described as impulsive and suboptimal in the presence of incentives. In this study we examined the neural substrates of adolescent decision-making using a perceptual discrimination task for which small and large rewards were associated with correctly detecting the direction of motion of a cloud of moving dots. Adults showed a reward bias of faster reaction times on trials for which the direction of motion was associated with a large reward. Adolescents, in contrast, were slower to make decisions on trials associated with large rewards. This behavioral pattern in adolescents was paralleled by greater recruitment of fronto-parietal regions important in representing the accumulation of evidence sufficient for selecting one choice over its alternative and the certainty of that choice. The findings suggest that when large incentives are dependent on performance, adolescents may require more evidence to accumulate prior to responding, to be certain to maximize their gains. Adults, in contrast, appear to be quicker in evaluating the evidence for a decision when primed by rewards. Overall these findings suggest that rather than reacting hastily, adolescents can be incentivized to take more time to make decisions when large rewards are at stake. A video abstract of this article can be viewed at http://youtu.be/1g4F5vzFDl0.

Duck or Rabbit? Joint Effects of Accounting Standard and Transaction Ambiguity on Aggressive Reporting by Managers in the Presence of Incentives to Report Aggressively

Duck or Rabbit? Joint Effects of Accounting Standard and Transaction Ambiguity on Aggressive Reporting by Managers in the Presence of Incentives to Report Aggressively

Associação entre sistema de incentivos gerenciais e práticas de contabilidade gerencial

O princípio da controlabilidade prevê que os gestores deveriam ser avaliados com base em fatores controláveis. Consequentemente, os incentivos gerenciais estariam relacionados a práticas de contabilidade gerencial capazes de evitar que os gestores sejam responsabilizados por resultados financeiros além do controle gerencial, tais como análise por centro de responsabilidade, custo padrão, preço de transferência, orçamento e avaliação de desempenho. Este artigo desenvolve um estudo de campo para investigar se há relação entre a presença de incentivos gerenciais e as práticas de contabilidade gerencial associadas ao princípio da controlabilidade. Entrevistas in loco foram realizadas para a coleta de dados em nível organizacional e testes estatísticos não paramétricos foram utilizados para a análise dos dados. Entre as práticas de contabilidade gerencial examinadas, os resultados sugerem que apenas orçamento anual, análise por centro de responsabilidade e avaliação de desempenho estão associados à presença de sistemas de incentivos nas empresas entrevistadas.

Evaluating the Impacts of the EU-ETS on Prices, Investments and Profits of the Italian Electricity Market

In this paper we investigate the economic impacts of the European Emission Trading Scheme (EU-ETS) on the Italian electricity market by a power generation expansion model. In particular, we assume that generators make their capacity expansion decisions in a Cournot or in a perfect competition manner. This model is used to measure the effects of the EU-ETS Directives on electricity prices and demand, investments and generators' profits both in an oligopolistic and in a perfectly competitive organization of the power market. We adopt a technological representation of the energy market which is discretized into six geographical zones (North, Center-North, Center-South, South, Sicily, Sardinia) and five virtual poles (Monfalcone, Foggia, Brindisi, Rossano, Priolo) with limited production for a total of eleven zones. We assume that generators operate in different zones connected by interconnections with limited capacity and produce energy by running existing or new plants in which they directly invest. We consider several investment scenarios under the CO2 regulation with and without incentives to renewables. The scenarios also include simulations on future effects of the third EU-ETS phase on the system. Our analysis shows that perfect competition induces generators to invest more than in an oligopolistic framework, but in both market configurations, investments are mainly concentrated in fossil-red plants (CCGT and coal), leaving a small proportion to new wind plants. This happens also in presence of incentives given to renewable technologies. We can thus conclude that investments in a secure and efficient technology like CCGT are preferable compared to those in renewables that cannot be used with continuity. This investment policy affects electricity prices that significantly increase in 2020 compared to their 2009 levels. The raise of electricity prices in 2020 is particularly favorable for generators operating as Cournot players which are able to increase their profits compared to 2009, despite the full auctioning system foreseen for the allocation of CO2 allowance to the power sector in the third EU-ETS phase. The solution of the overall system is found by exploiting the mixed complementarity theoretical framework and solution algorithms. The developed model is implemented as complementarity problems and solved in GAMS using the PATH solver.

The impact of cognitive biases on fraudulent behaviour: the Leeson case

The forensic accounting literature (e.g., Albrecht et al., 2010) places a great deal of importance on the so-called fraud triangle of motive-means-opportunity. Wolfe and Hermanson (2004) presents a cognitive analysis of factors that may impact the motivation element in the fraud triangle, arguing that situational and other factors may lead individuals to engage in illegal acts without conscious intent to violate the law. We argue that cognitive analyses are important also in understanding individual evaluations of the means and opportunities that confront them. We draw on relevant psychological literature to show how cognitive heuristics can be used to explain why certain managers, in the presence of incentives, rationalise and commit fraud in accounting. We use the 'fraud diamond' (Wolfe and Hermanson, 2004) as the basis of our theoretical development. We use the Leeson/Barings bank's case as an example to demonstrate the application of cognitive biases in the perpetration of fraud.