An examination of market efficiency: Information order effects in a laboratory market

Tuttle, Brad; Coller, Maribeth; Burton, Frances

doi:10.1016/s0361-3682(96)00026-8

Cited by 71 publications

(29 citation statements)

References 19 publications

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“…In many cases, however, markets do not mitigate biases (Camerer, 1992). In fact, the Tuttle et al (1997) finding of significant recency effects in market prices suggests that markets cannot be counted on to eliminate the particular bias that we study. Camerer et al (1989) and Ganguly et al (1994) provide other examples of biases that persist in market settings (e.g.…”

Section: Discussionmentioning

confidence: 74%

Eliminating recency with self‐review: the case of auditors' ‘going concern’ judgments

Ashton¹,

Kennedy²

2002

Behavioral Decision Making

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This paper examines the use of self-review to debias recency. Recency is found in the 'going concern' judgments of staff auditors, but is successfully eliminated by the auditor's use of a simple self-review technique that would be extremely easy to implement in audit practice. Auditors who self-review are also less inclined to make audit report choices that are inconsistent with their going concern judgments. These results are important because the judgments of staff auditors often determine the type and extent of documentation in audit workpapers and serve as preliminary inputs for senior auditors' judgments and choices. If staff auditors' judgments are affected by recency, the impact of this bias may be impounded in the ultimate judgments and choices of senior auditors. Since biased judgments can expose auditors to significant costs involving extended audit procedures, legal liability and diminished reputation, simple debiasing techniques that reduce this exposure are valuable. The paper also explores some future research needs and other important issues concerning judgment debiasing in applied professional settings.

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Section: Discussionmentioning

confidence: 74%

Eliminating recency with self‐review: the case of auditors' ‘going concern’ judgments

Ashton¹,

Kennedy²

2002

Behavioral Decision Making

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“…The research result is consistent with that predicted that individuals who have a high level of confidence that will tend to ignore the information available, the impact on individuals with a high level of confidence will be spared from the effects of the information sequence. A number of previous researches (Pinsker, 2007;Baird and Zelin II, 2000;Tuttle, Coller and Burton, 1997) examined the effect of information order and enclosure pattern in investment judgment.…”

mentioning

confidence: 99%

The Effect of Overconfidence and Experience on Belief Adjustment Model in Investment Judgement

Almilia¹,

Wulanditya²

2016

IRJBS

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This study examines the effect overconfidence and experience on increasing or reducing the information order effect in investment decision making. Subject criteria in this research are: professional investor (who having knowledge and experience in the field of investment and stock market) and nonprofessional investor (who having knowledge in the field of investment and stock market). Based on the subject criteria, then subjects in this research include: accounting students, capital market and investor. This research is using experimental method of 2 x 2 (between subjects). The researcher in conducting this experimental research is using web based. The characteristic of individual (high confidence and low confidence) is measured by calibration test. Independent variable used in this research consist of 2 active independent variables (manipulated) which are as the followings: (1) Pattern of information presentation (step by step and end of sequence); and (2) Presentation order (good news -bad news or bad news -good news). Dependent variable in this research is a revision of investment decision done by research subject. Participants in this study were 78 nonprofessional investor and 48 professional investors. The research result is consistent with that predicted that individuals who have a high level of confidence that will tend to ignore the information available, the impact on individuals with a high level of confidence will be spared from the effects of the information sequence.

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“…12 As will be discussed in more detail later, there are an equal number of positive and negative disclosures for each round. Therefore, consistent with Tuttle et al (1997), we deem a net offset of all disclosures against one another. dichotomy of short (16 or less) vs. long (17 or more) series of reporting periods (as defined by Hogarth and Einhorn, 1992; see footnote #7) and are designed specifically for the user characteristics' hypotheses.…”

Section: Methodsmentioning

confidence: 86%

“…1016/j.jaccpubpol.2009.07.005 are driven by information-based characteristics or user-based characteristics. We focus on nonprofessional investors because prior research has shown that this investor classification is a significant market subset and can potentially affect market outcomes (Delong et al, 1989(Delong et al, , 1990(Delong et al, , 1991Tuttle et al, 1997). Using prior research from the materiality, investor behavior, and psychology literatures to support our predictions, we conduct a series of experimental markets to address the above goals.…”

Section: Introductionmentioning

confidence: 99%

An investigation of nonprofessional investors’ qualitative materiality judgments incorporating SEC listed vs. non-listed events

Pinsker

Pitre

Daigle

2009

Journal of Accounting and Public Policy

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a b s t r a c tWhen the SEC began listing specific potentially material events in its Regulation FD [Regulation Fair Disclosure, 2000. SEC Release 33-7881, Rules 101-103], it deviated from its long-time ''policy" of not providing materiality guidance to auditors and managers. What is currently unclear in the materiality literature is which factor(s) -information-based characteristics or user-based characteristicshas an effect on nonprofessional investor qualitative materiality judgments. Using a series of experimental markets, we examine and find no evidence that an information-based characteristic (distinguishing between listed and non-listed events) has an effect on nonprofessional investors' materiality judgments. Our evidence regarding user-based characteristics is mixed. We do not find evidence of the direction of disclosed events impacting investors' judgments, but we do find evidence of an anchoring effect. Our findings indicate that the content of the information disclosed to nonprofessional investors is not as important as the timing of the disclosure. Our investigation is unique in that we consider the (qualitative) nature of the event, rather than simply its (quantitative) magnitude.

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An examination of market efficiency: Information order effects in a laboratory market

Cited by 71 publications

References 19 publications

Eliminating recency with self‐review: the case of auditors' ‘going concern’ judgments

Eliminating recency with self‐review: the case of auditors' ‘going concern’ judgments

The Effect of Overconfidence and Experience on Belief Adjustment Model in Investment Judgement

An investigation of nonprofessional investors’ qualitative materiality judgments incorporating SEC listed vs. non-listed events

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