Witnessing Your Own Cognitive Bias: A Compendium of Classroom Exercises

• In Event: Continental Breakfast and Research & Education Forum
  In Roundtable Session: Table 11: Personal Biases in Accounting

Abstract

Accounting and auditing professors continually stress the importance of effective judgment and decision making, 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. Highlighting five frequently-occurring biases that have been shown to adversely impact business judgments (i.e., availability, anchoring, overconfidence, confirmation, and rush to judgment), we present a collection of classroom exercises that provide students with the opportunity to explore both the nature and impact of these common biases on their own judgments. 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.

Authors

• Rebecca Fay, East Carolina University

• Norma Ramirez Montague, Wake Forest University