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The belief-adjustment model has been an integral part of accounting research in belief revision, especially in the examination of order effects. Hogarth and Einhorn ((1992) Cognitive Psychology, 24, 1–55) created the belief-adjustment model to serve as a theoretical framework for studying individuals’ decision-making processes. The model examines several aspects of decision-making, such as encoding, response mode, and task factors. The purpose of this chapter is to provide a comprehensive examination of the accounting studies that have used the theoretical framework of the belief-adjustment model in auditing, tax, and financial accounting contexts. Roberts’ ((1998) Journal of the American Taxation Association, 20, 78–121) model of tax accountants’ decision-making is used as a guideline to organize the research into categories. By using Roberts’ categorization, we can better sort out the mixed results of some prior studies and also expand the review to include a more comprehensive look at the model and its application to accounting. While many variables have been examined with respect to their effect on accounting professionals’ belief revisions, most studies examine them in isolation and do not consider the interaction effects that these variables may have. Our framework also identifies areas of the belief-adjustment model that need further research.

The cognitive composition process of attribute information plays a critical role in heuristic aspects of consumers’ multiattribute preferential decisions. This study examines the effects of attribute information order and attribute information amount on consumers’ multiattribute preferential decisions under the premise of consumers’ limited information processing capacity. An experiment with two separate designs is conducted for testing the different hypotheses. The results support the hypothesis that consumers’ multiattribute preferential decisions are influenced by the amount of attribute information received/processed. The attribute information order is found to affect not only the outcomes of consumer decisions but also the amount of attribute information processed. These findings further suggest that consumers may be more inclined to adopt strategies of a noncompensatory heuristic nature when making multiattribute preferential decisions.

Nonfinancial information is becoming more readily available to investors, and thus, relative to annual financial reports, is having an increasing influence on investors' stock pricing decisions. Using Hogarth and Einhorn's (1992) belief-adjustment model, we examine how task familiarity (high, medium, and low) influences nonprofessional investor stock price decisions when these investors are presented with a stream of both positive and negative nonfinancial news. We find that task familiarity negatively correlates with reaction size for both positive and negative information, which creates arbitrage opportunities for those with more task familiarity. However, we find that assurance mitigates this effect, leveling the playing field for less task-familiar investors in most cases. These findings are important as the volume and variety of information types increase, and as more nonfinancial information enters the marketplace in discrete sound bites (e.g., social media, press releases, daily reports). Findings suggest that assurance is one way to lessen the biases exhibited by investors with less task familiarity. These results enhance our understanding of nonprofessional investor behavior through the lens of belief revision.

Subjects (n = 200) received a detailed description of a product and were asked to rate their attitudes about this product. Presentation order, source credibility and message framing were manipulated in a 2× 2× 2 completely crossed factorial design. Subjects who received a positively framed message rated product attitudes significantly greater than those subjects who received a negatively framed message. Also, significant differences in message framing effects were found for those subjects who received the framed message first in the nonexpert condition (credibility) and those subjects who received the framed message last in the expert condition. Findings are then discussed.

Hogarth and Einhorn (1990) posited a psychological model for updating beliefs that is based on an anchoring and adjustment process which incorporates a contrast or surprise effect; in particular, the larger the current belief in a hypothesis or outcome, the more it is discounted by negative information and the less it is increased by positive information. The model provides a set of predictions that could be of important implications for financial decisions. It predicts strong recency effects for mixed or conflicting information (negative and positive), and no order effects for consistent information (all positive or all negative). Furthermore, an earlier version of the model (1985) predicts that simultaneous processing of consistent information leads to more extreme responses than the sequential processing of the same information. Einhorn and Hogarth refer to this phenomenon as a “dilution effect.” This paper reports the results of testing these qualitative predictions of the belief updating model. Three experiments involving a content rich scenario of asset valuation judgment were conducted using a sample of 120 subjects enroled in two MBA courses. The results support the model's prediction that there is no order effects attributable to sequential processing of consistent information. The results also support the existence of recency effects for mixed information regardless of the response mode. However, no significant effects were observed for processing consistent information under different response modes.

This study seeks to investigate how attitude towards and purchase intention of a product will be affected by involvement level and presentation order of positive and negative word‐of‐mouth (WOM) information when presented in a single‐message single‐source context.

Two studies were conducted with undergraduates of a top Asian university with sample sizes of 221 and 253 using experimental setups.

It was found that subjects tend to base their evaluations more on later information than earlier information regardless of involvement level. This recency effect was consistently found across the product categories of tourist destination and restaurant in both studies.

The main limitation is that the manipulation of involvement level might not have been strong enough. Despite obtaining differences between high and low involvement levels in the pretest for both products, the difference was found again in only the restaurant category in the manipulation check of both studies. Future research can increase the gap between high and low involvement levels using non‐laboratory settings to ensure effective involvement level manipulation.

Findings of this paper can help companies to position messages in their favour when both positive and negative information needs to be presented.

There has been a lot of marketing research on WOM but none has focused on covering positive and negative WOM coming from the same source despite it being a commonality in reality. This paper fills this gap with an investigation into the effects of single‐message single‐source mixed WOM on product attitude and purchase intention.

This study examines whether manipulation in attributes of corporate narrative disclosures and the use of graphical representations can bias non-professional investors' judgment towards firms' future performance, in an emerging market context.

The authors conduct three different experiments with a 2 × 2 between-subjects design, using accounting and finance senior undergraduate students to proxy for the non-professional investors.

Results show that simple (more readable) disclosures improve non-professional investors' judgment towards firms' future performance. In addition, it is found that non-professional investors are prone to a recency effect from the intentional ordering of narrative information, when using complex (less readable) narratives. However, no primacy effect is found, when using simple (more readable) disclosures. The results further provide evidence that the inclusion of graphical representations, along with the manipulated narrative disclosures, can moderate the recency effect of information order, when using less readable and complex narrative disclosures.

The results reveal that although the content of corporate disclosures can be objective, neutral and relevant, manipulation in textual features and the use of graphical presentations, can interact to impact how non-professional investors perceive and process the disclosed information. This study provides an Egyptian evidence regarding this issue, as the majority of prior studies concentrate on developed capital markets. In addition, it contributes to prior studies evaluating the appropriateness of the Belief Adjustment Model predictions about the effect of textual presentation order on decision-making, by providing evidence from an emerging market.

Results attempt to increase the awareness of investors and encourage them to use multiple sources of information to avoid the probable bias that can result from management's manipulation of narratives. In addition, the study could be of interest to regulators and standard-setters, where the results reveal the need for guidelines and regulations to guide the disclosure of narrative information and the use of graphical information in corporate reports.

To the best of the authors' knowledge, this is the first study to examine the effect of two impression management strategies in narrative disclosures (readability and information order), along with the use of graphical representations, on non-professional investors' judgment in an emerging market, like Egypt.

The purpose of this paper is to test if the order in which potential customers receive company related information and product related information about a new brand can influence their trust and purchase intentions towards that brand. The empirical context is when both product and company are new to a market and share a brand name.

Two experiments, each involving a different product type, are used to test whether higher trust and purchase intentions towards a new brand are likely when company related information is provided first compared to when product related information is provided first.

Company related information is more diagnostic than product related information and carries more weight in initial consumer trust judgements particularly when it is evaluated first. There is a similar primacy effect on purchase intentions but one mediated by initial trust. The effect is more pronounced for product types that involve a higher perceived risk when buying.

This paper adds to our understanding of the respective roles of corporate and product communication in the process of brand trust formation for newly launched brands by evidencing and explaining primacy effects related to the greater diagnosticity of corporate brand information.

Market entrants should communicate information about their company before promoting their products.

While prior work has shown that both company and product related information can influence customers’ trust towards a new brand, there has been no assessment of the benefits from ordering these communications. The focus here is then on the processes involved in brand trust formation, rather than on identifying specific antecedents of brand trust.

The primary purpose of this study is to determine the impact of information ordering in Shariah Supervisory Board Report (SSBR) on investors’ behavior and perception about the performance of Islamic bank in terms of Shariah compliance and other conventional parameters.

The study used the belief adjustment model to evaluate the desired effects of ordering positive and negative information (if any) in SSBR of an Islamic bank. This study extends the previous literature on information ordering as a pioneer experimental study in emerging economies.

Evidence shows that investors and technical users of performance reports consider SSBR as significant for financial and investment decisions from the Islamic perspective. The results indicate that the primacy effect does exist and is statistically significant.

The SSBR provides the management with an excellent opportunity to communicate and convince the investors about Shariah compliance features of an Islamic bank. Additionally, it also highlights the functional use of impression management to manipulate the investor’ behavior and perception.

For the first time, this study specifically investigates the effect of conscious information ordering in SSBR of Islamic banks on investors perceptions and behaviors.

Experimental auctions are widely used as a non-hypothetical value elicitation method to examine consumer preferences for novel, controversial foods. However, despite its advantages over hypothetical methods, its practice might lead to a wide variety of biases. The purpose of this paper is to provide a list of key cognitive biases and design effects in food auction research and to deliver scientifically underpinned procedures in order to assess, control and reduce them. Its applicability and relevance is examined in auctions on willingness-to-pay for folate (GM) biofortified rice.

Based on auction literature, a list of 18 biases has been developed. Experimental auctions were conducted with 252 women from Shanxi Province, China to test the occurrence of eight biases, while demonstrating measures to reduce the risk of ten biases.

The results lend support for three information-related effects, i.e. confirmation bias, conflicting product information effects and a primacy bias, but not for a multiple-good valuation effect, a panel size effect, a trial winner effect and time-related sampling biases. Furthermore, there are no clear indications of social desirability bias, auction fever and a false consensus effect.

This study emphasizes the need to take into account, and measure the risk of various biases when developing, organizing and interpreting experimental auctions. Future research should further extend the list of biases and validate the study findings.

By using a highly topical subject, this study is one of the first to address the potential risk of cognitive biases and design effects in experimental (food) auctions.