Influence of motivated reasoning on saving and spending decisions

Mishra, Himanshu; Mishra, Arul; Rixom, Jessica; Chatterjee, Promothesh

doi:10.1016/j.obhdp.2012.10.003

Cited by 15 publications

(8 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Accuracy goals Kunda (1999) argues that people have accuracy goals (i.e., goals to arrive at the most correct conclusions, whatever they happen to be), in addition to directional goals (i.e., goals to arrive at a particular conclusion). People seeking the most accurate conclusion are less likely to select biased judgment strategies or decision rules (Kunda 1990); simply focusing people on being accurate, even without changing their incentives, reduces biased information processing (Mishra et al 2008(Mishra et al , 2013. We expect that auditors generally have a preference, or a directional goal, to conclude that management's accounting is acceptable.…”

Section: Documentation Focusmentioning

confidence: 99%

Improving Auditors' Consideration of Evidence Contradicting Management's Estimate Assumptions

Austin

Hammersley²,

Ricci

2020

Contemporary Accting Res

View full text Add to dashboard Cite

Auditors have difficulty evaluating the assumptions underlying management's estimates. One source of these problems is that auditors appear to dismiss evidence contradicting management's assumptions because their initial preference to support management's accounting biases their preliminary conclusions and, thus, their interpretation of evidence. We experimentally examine whether auditors with a balanced focus (i.e., a focus on documenting evidence that supports and contradicts their preliminary conclusion) are less likely to dismiss evidence that contradicts management's assumptions than auditors with a supporting focus (i.e., a focus on documenting evidence that supports their preliminary conclusion). We expect and find that, compared with auditors with a supporting focus, auditors with a balanced focus create documentation that is less dismissive of evidence contradicting management's estimate. Importantly, a balanced focus changes auditors' cognition and affects how auditors interpret contradicting evidence rather than merely increasing their documentation of this evidence. The effects of reduced dismissiveness persist to improve auditors' evaluations of a biased estimate and subsequent actions, improving audit quality in an important and difficult area.

show abstract

Section: Documentation Focusmentioning

confidence: 99%

Improving Auditors' Consideration of Evidence Contradicting Management's Estimate Assumptions

Austin

Hammersley²,

Ricci

2020

Contemporary Accting Res

View full text Add to dashboard Cite

show abstract

“…Goal activation theory holds that activation of specific goals significantly influences one's reasoning by affecting how information is processed and evaluated, consistent with motivated reasoning (e.g., Custers and Aarts 2014;Weber and Johnson 2009;Förster et al 2007;Kunda 1999Kunda , 1990). 3 Activation of accuracy goals leads people to be more likely to focus on being accurate, resulting in reduced biased information processing (Mishra et al 2013;Mishra et al 2008;Kunda 1990). Conversely, activation of directional goals leads people to be more likely to search for information supporting their preferred conclusions, and to call upon decision rules that are likely to support these conclusions (Kunda 1990).…”

Section: Goal Activation Theorymentioning

confidence: 99%

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

Kang

Piercey

Trotman

2019

Contemporary Accting Res

View full text Add to dashboard Cite

The current audit environment encourages auditors to conduct defensive auditing procedures in lieu of using new, innovative, and potentially more effective audit procedures, due to concerns these procedures may be second‐guessed in litigation or by audit inspectors such as the PCAOB. As a result, auditors may prefer traditional “generally accepted” procedures over innovative procedures that are potentially more effective. We test recent proposals that an Audit Judgment Rule (AJR) encourages the use of innovative, and potentially more effective, audit procedures analogous to the similar Business Judgment Rule that affords legal protections to corporate directors. Under an AJR, litigators or audit inspectors could not second‐guess auditor judgments, even if they perceive that alternate judgments would have ordinarily been reached, provided the auditor's judgment was made in good faith and in a rigorous manner. However, the AJR's requirements that auditors must defend the rigor of their innovative judgments could potentially backfire and lead auditors to select more traditional procedures. Under the framework of goal activation theory, we conduct an experiment with audit managers and seniors and find that an AJR makes auditors less likely to select innovative audit procedures, particularly when audit risk is high. They do so despite believing the innovative procedures to be more effective than the traditional procedures. Findings from a supplementary experiment with experienced auditors further suggest that national office affirmation of the reasonableness of the procedures does not help overcome this effect. Overall, our findings suggest that an AJR may have the unintended consequence of further increasing auditors' focus on more traditional, and potentially less effective, audit procedures.

show abstract

“…For instance, consumers more frequently purchase restaurant dinners with live entertainment when the purchase can be assigned to either a food budget or an entertainment budget compared with when categorization constraints restrict the expenditure to a single budget category alone; purchases that can be posted to multiple budget categories are more easily justified (Cheema and Soman 2006). A variety of evidence from this domain has documented that mental accounting is malleable when it comes to purchase categorization; when ambiguity exists in budget categorization, consumers exploit that ambiguity to justify desirable purchases (Cheema and Soman 2006; Mishra et al 2013; Soman and Cheema 2001).…”

Section: Conceptual Overviewmentioning

confidence: 99%

Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

Cheng

Cryder

2018

Journal of Marketing Research

View full text Add to dashboard Cite

This research finds that when a single gain has strong associations with multiple costs, consumers often mentally deduct that gain from perceived costs multiple times. For example, with some price promotions (e.g., spend $200 now and receive a $50 gift card to spend in the future), consumers mentally deduct the value of the price promotion from the cost of the first purchase when they receive the promotion, as well as from the cost of the second purchase when they use the promotion. Multiple mental deductions based on a single gain result in consumers' perceptions that their costs are lower than they actually are, which can trigger higher expenditures. This mental accounting phenomenon, referred to as “double mental discounting,” is driven by the extent to which gains feel associated, or coupled, with multiple purchases. This article also documents methods to decouple promotional gains from purchases, thus mitigating double mental discounting.

show abstract

Influence of motivated reasoning on saving and spending decisions

Cited by 15 publications

References 25 publications

Improving Auditors' Consideration of Evidence Contradicting Management's Estimate Assumptions

Improving Auditors' Consideration of Evidence Contradicting Management's Estimate Assumptions

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

Contact Info

Product

Resources

About