Research in budgeting suggests that subordinates may exhibit economically significant degrees of honesty, in spite of pecuniary incentives to do otherwise. This study continues the exploration of honesty in budgeting along two dimensions. First, unlike prior experiments, we measure the incremental effect of honesty by manipulating whether budget requests are made in the form of a factual assertion. Second, prior designs may have emphasized the ethical dimension of budgeting by granting the subordinate wide discretion over setting the budget, whereas we manipulate whether the subordinate or the superior has final authority over setting the budget. We find that less slack is created when budget communication requires a factual assertion in the subordinate authority treatment, but not when the superior has final authority. Hence, we find an incremental effect of honesty only when the subordinate has final authority. We conjecture, and provide some evidence, that this is due to subordinates framing the superior authority situation as one of negotiation where each party acts in his or her self-interest, rather than as an ethical dilemma. This view, that budgeting is essentially devoid of ethical considerations, is consistent with some recent characterizations of budget practices.

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We use an experiment to investigate the efficacy of a nonbinding budgetary announcement made by an owner in order to mitigate a management control problem induced by asymmetric information. The owner's announcement indicates how much funding she will provide for each possible cost report by the manager regarding an investment opportunity. The manager has private knowledge of the cost, incentive to overstate it, and the ability to do so undetected by the owner. The experiment consists of three treatments: (1) the owner fully commits to honor her announcement regarding how she will use the manager's cost report, (2) the owner makes no announcement at all, and (3) the owner makes a nonbinding announcement regarding how she will use the manager's cost report. The first two treatments establish empirical benchmarks to gauge the effectiveness of the nonbinding announcement. There are three main results. First, owners in the nonbinding announcement treatment significantly outperform those in the no-announcement treatment throughout the experiment. Second, owners appear to use the nonbinding announcement as a bluff in an attempt to convince managers that they will reject a profitable project more often than they intend. This strategy appears to be particularly effective for the owners in the first half of the experiment. Third, the difference in owner welfare between the nonbinding announcement and binding announcement treatments is much less than the prediction made from standard game-theoretic assumptions. The third result suggests that, to the extent that commitment is costly, an optimal control system might not employ commitment.

A review of self-management outcome research conducted with children and youth who exhibit behavioral disorders is presented. As indicated by the moderate to large treatment effects, self-management procedures have been shown to be effective in promoting the social and academic behaviors of children and youth who exhibit behavioral disorders. Further, the obtained treatment effects appear to be durable and suggest that such procedures may be a viable option to externally managed programs. The findings also suggest that the treatment effects fail to generalize unless the procedures are systematically programed.

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