Witnessing Your Own Cognitive Bias: A Compendium of Classroom Exercises

44 Pages Posted: 3 Jul 2014 Last revised: 12 Sep 2014

See all articles by Rebecca Fay

Rebecca Fay

East Carolina University - College of Business

Norma R. Montague

Wake Forest University - School of Business

Date Written: July 1, 2014

Abstract

Accounting and auditing professors continually stress the importance of effective judgment and decision making (JDM), yet few accounting programs or textbooks discuss the biases that may impact an individual’s ability to exercise high-quality professional judgment. In recent years, KPMG (Ranzilla, Chevalier, Hermann, Glover, and Prawitt 2011) and the Committee of Sponsoring Organizations of the Treadway Commission (KPMG, Glover, and Prawitt 2012) addressed this gap at the corporate level by publishing guidance for accounting professionals and board members on how to identify and mitigate common judgment biases, yet there remain few resources designed for accounting students. This collection of exercises enables instructors to introduce the topic of effective JDM in the classroom. It provides students with the opportunity to identify bias in their own judgments by highlighting five frequently-occurring biases that adversely impact business judgments (i.e., availability, anchoring, overconfidence, confirmation, and rush to judgment). This compendium gathers exercises from psychology literature that may be used to pique student interest and encourage discussion of how each bias impacts judgments made by accounting professionals.

Keywords: cognitive bias, case studies, overconfidence, confirmation, anchoring, availability, decision-making

JEL Classification: M41, M49, D89

Suggested Citation

Fay, Rebecca and Montague, Norma R., Witnessing Your Own Cognitive Bias: A Compendium of Classroom Exercises (July 1, 2014). Issues in Accounting Education, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2461275 or http://dx.doi.org/10.2139/ssrn.2461275

Rebecca Fay (Contact Author)

East Carolina University - College of Business ( email )

Greenville, NC 27858-4353
United States
252-737-4598 (Phone)

Norma R. Montague

Wake Forest University - School of Business ( email )

P.O. Box 7659
Winston-Salem, NC 27109
United States

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