Opportunity Cost and Behavior

Fifty-year overview of judgment and decision-making research in accounting

“…Opportunity costs were also investigated further, partly because of the conflicting findings from the 1970s regarding decision-makers' inclination or ability to incorporate opportunity costs into their decisions. Friedman and Neumann (1980) went some way to reconciling earlier research, finding that opportunity cost information was ignored unless it was explicit and made available at no extra cost, and Hoskin (1983) found that the provision of explicit ex post opportunity cost information led to improved responses over time.…”

Spending Time versus Spending Money

“…w effort. People fail to calculate the opportunity costs of time when unstated (Neumann and Friedman 1980) and underestimate them when prompted (Hoskin 1983). Underappreciation of opportunity costs produces temporal spendthrifts and monetary misers, wasting time on lower-value activities *Erica Mina Okada is assistant professor of marketing at the University of Washington, Box 353200, Seattle, WA 98195 (emokada@u.washington .edu), and Stephen J. Hoch is John J. Pomerantz professor of marketing at the Wharton School, University of Pennsylvania, Philadelphia, PA 19035 (hochs@wharton.upenn.edu).…”

On the assessment of costs in a newsvendor environment: Insights from an experimental study

“…They conclude that decision makers underweight opportunity costs when only partial information is available. While Becker et al [1] as well as Friedman and Neumann [13] investigate a setting with a certain environment, Hoskin [16] considers the assessment of opportunity costs in an uncertain environment. Seventeen years before the seminal paper by Schweitzer and Cachon [31], the experimental study of Hoskin [16] had already addressed human behavior in the newsvendor problem.…”