Prior research suggests that decision-makers can be biased by anecdotal data, even in the presence of more informative statistical data. A bias for anecdotal data can have significant implications for managers since judgments are often made when both statistical and anecdotal data are present. However, since much of the prior research has been conducted primarily on non-professionals engaged in unfamiliar tasks, it is unclear whether anecdotal biases will occur in managerial decision-making, where training and professional duties may reduce the effects of such a bias. Smith and Kida (1991) note, for example, that judgment biases are often mitigated or modified when trained professionals perform job-related tasks. In this study, managers and others with significant business experience were asked to make a capital budgeting decision in the presence of both statistical and anecdotal data. The results indicate that decision-makers ignored, or underweighted, statistical data in favor of anecdotal data, leading to suboptimal decisions. However, a scientific judgment orientation decision-aid did help to mitigate the effects of that bias. The implications of these results for decision-making in managerial accounting are discussed.
I would like to thank the editor, Dr Khondkar Karim, and an anonymous reviewer for their insightful comments and suggestions. I would also like to thank Chris Agoglia, Andrew Cohen, Dennis Hanno, Tamara Lambert, Theresa Libby, Ben Luippold, Ron Mannino, Linda Peters, Steve Perreault, David Piercey, Jesse Robertson, Shirley Shmerling, Kathryn Sullivan, Pam Trafford, and 2012 AAA annual meeting participants for their helpful comments and suggestions. A very special thanks to Tom Kida and Jim Smith for their extensive contribution to earlier versions of the manuscript.
Wainberg, J. (2018), "Stories vs Statistics: The Impact of Anecdotal Data on Managerial Decision Making", Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 21), Emerald Publishing Limited, pp. 127-141. https://doi.org/10.1108/S1475-148820180000021006Download as .RIS
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