Choice reversal in management decisions: the seductive force of new information

Abstract

The way in which objectively similar information is presented influences the direction of choice and decisions. Therefore, the sequential order in which information is presented to managers may have a relevant impact on how this information is perceived and evaluated. This study examines the consequences of information pursuit on judgment and decision making (JDM) in managerial decision making. In four experimental JDM-scenarios information pursuit was realised by a step-by-step approach with a time delay in which one group had the option of waiting for additional, non-instrumental information. Results indicate that the acquisition of new information, even if it is non-instrumental, leads to choice reversals (in one out of two scenarios) or to choice enhancement (in one out of two scenarios). In line with social psychology theories, we argue that the mental costs of information gathering lets participants believe that this information is more relevant than the already known facts. Our findings contribute to managerial JDM literature and indicate that cognitive dissonance and self-affirmation can significantly impact choices and decisions during information pursuit.

An examination of a pragmatic approach to minimizing underreporting of time

“…Rationalization is an approach to reducing cognitive dissonance (Festinger, 1957; Aronson, 1980; Crump, 2008; Randles et al , 2015), which is a psychological state of conflicting ideas, beliefs, attitudes or opinions (Festinger, 1957; Aronson, 1980; Lowell, 2012). New information is a factor that induces cognitive dissonance and leads to an affirmation of or change in belief (Frey, 1986; Elliott and Devine, 1994; Basel and Brühl, 2016). Inconsistency between an initial belief and new information causes discomfort, and a person committed to a belief will minimize, avoid or invalidate any contradictory new information and accept confirming information (Lord et al , 1979; Aronson, 1980; Frey, 1986; Woolley, 2007).…”

“…According to Woolley (2007, p. 41), “rational decisions based on unbiased evaluation of all evidence could cause discomfort by forcing decision-makers to become aware of their incorrect judgment or beliefs.” A person can change an initial belief in response to the cognitive dissonance or rationalize the new information and alleviate the cognitive dissonance. Hence, cognitive dissonance theory proposes that factors, such as new information, affects reasoning and cognitive dissonance directs the resulting decisions (Basel and Brühl, 2016).…”

“…Alternatively, the auditor can make an ethical decision, based on the new information and accurately report their time (Lord et al , 1979). A decision to act ethically because of the new information is a voluntary choice governed by cognitive dissonance (Festinger, 1957; Basel and Brühl, 2016).…”

The internationalisation of management accounting research in the German-speaking countries – a longitudinal study

“…The integration of these databases from the mid-1990s onwards represents a convergence of accounting practices among countries (Brandau et al, 2017). In the second sub-period, more general issues such as information presentation and visualisation (Basel and Brühl, 2016;Obermaier et al, 2015) have been studied in addition to the sustained discussion of the integration of management accounting and financial accounting systems. With one exception (Weißenberger and Angelkort, 2011), all papers of this stream have been published in domestic journals.…”