Predictable Irrationality in Managerial Accounting: Does Knowledge Overcome Cognitive Biases of Undergraduate Students?
DOI
10.1080/08832323.2018.1536029
Abstract
Managerial accounting teaches students to make rational decisions by evaluating sunk costs, incremental costs, and opportunity costs. The behavioral literature suggests that biases and heuristics overcome rational thinking. The authors explore whether learning cost concepts attenuates behavioral biases. They find a statistically significant proportion of students completing a managerial accounting course exhibit predictable irrationality in personal choices. By matching behavioral choices with final exam answers, the authors also find that learning rationality principles in accounting does not reduce predictably irrational choices in other settings. The study findings are robust across three key rational concepts. Overall, the authors cannot reject the hypothesis that behavioral choices are independent of knowledge of the underlying principle of rationality.
Document Type
Article
Publication Date
1-8-2019
Publisher Statement
Copyright © 2019, Routledge.
Recommended Citation
Clikeman, Paul M., and Jerry L. Stevens. “Predictable Irrationality in Managerial Accounting: Does Knowledge Overcome Cognitive Biases of Undergraduate Students?” Journal of Education for Business 94, no. 6 (2019): 351–58. https://doi.org/10.1080/08832323.2018.1536029.