Stories vs. Statistics: The Impact of Anecdotal Data on Professional Decision Making

30 Pages Posted: 24 Mar 2010 Last revised: 21 Mar 2014

James Wainberg

Florida Atlantic University - School of Accounting

Thomas Kida

University of Massachusetts at Amherst

James F. Smith

University of Massachusetts Amherst

Date Written: March 12, 2010

Abstract

Prior research suggests that decision makers can be biased by anecdotal data, even in the presence of more informative statistical data. However, much of that research has been conducted on non-professionals. Smith and Kida (1991) note that judgment biases are often mitigated or modified when professionals perform job-related tasks. As a result, it is unclear whether anecdotal biases will occur in professional decision making, where training, incentives, and professional duties may reduce the effects of such a bias. We conduct experiments in two different professional contexts (i.e., management decision making and auditing) and find that business professionals ignored, or underweighted, more informative statistical data in favor of anecdotal data, leading to suboptimal business decisions. In addition, we investigate whether two decision aids, judgment orientation and counter-argument, mitigate the effects of this anecdotal bias. The results indicate that both decision aids can reduce the influence of anecdotal data.

Keywords: Stories vs. Statistics, Anecdotal Bias, Judgment Orientation, Counter-Argument

JEL Classification: M41, M49

Suggested Citation

Wainberg, James and Kida, Thomas and Smith, James F., Stories vs. Statistics: The Impact of Anecdotal Data on Professional Decision Making (March 12, 2010). Available at SSRN: https://ssrn.com/abstract=1571358 or http://dx.doi.org/10.2139/ssrn.1571358

James Wainberg (Contact Author)

Florida Atlantic University - School of Accounting ( email )

University Tower
220 SE 2 Avenue
Boca Raton, FL 33431
United States

Thomas Kida

University of Massachusetts at Amherst ( email )

Isenberg School of Management
Amherst, MA 01003
United States
413-545-5650 (Phone)
413-545-3858 (Fax)

James F. Smith

University of Massachusetts Amherst ( email )

Department of Operations and Information Managemen
Amherst, MA 01003
United States

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