Psychology Models of Management Accounting

NEUROSCIENCE AND MANAGEMENT: CHALLENGES FOR BEHAVIOuRAL RESEARCH IN ORGANIZATIONS

“…In neuroeconomic literature we can find studies in which they find that there is substantial overlap between areas activated by social reward and activation observed in studies of reinforcement learning or anticipated money reward (Fehr and Camerer, 2007). For this, due to the fact that honest reporting induced by monetary incentives can be costly (Luft and Shields, 2009), an alternative could be to use non-monetary incentives which reinforce the social preferences of people to be honest. A way to achieve this is through the design of management control system, such as beliefs system and boundary systems defined by Simons (1995).…”

“…Combining the methods of neuroscience and economics generates powerful tools for studying the brain processes behind human social interaction (Fehr and Camerer, 2007). Economics and others social sciences might benefit from social neuroeconomics because of the potentially unifying force of neural data for choice-based approaches (Luft and Shields, 2009). …”

“…Management research on organizational behaviour has been based widely on rational economic models, where individuals are expected to make decisions considering every piece of available information (Luft and Shields, 2009). However, people often seem to make irrational decisions.…”

“…Over 90% of the decisions we make are directly or indirectly induced by our subconscious, but people try to justify with economic or logical reasons. In this sense it has been shown that individuals tend to use heuristics to reduce complex problems to simple decisions, and thus they are affected by many biases, such as risk perception or overconfidence (Sharot, Delgado and Phelps, 2004;Luft and Shields, 2009). These biases cannot be ignored because they can have negative consequences for organizations and business, as it was evidenced by the sub-prime mortgage crisis.…”

“…Methodical advancements in this field allow researchers to open up what has been considered a 'black box' thus far. While much remains to discover, joint research efforts of economist, cognitive psychologists and neuroscientists have resulted in discovery of brain areas and systems that participate in cognitive processes like conscious decision making, coping with risk and uncertainty, intertemporal choice, and reward and punishment (Kuorikoski and Ylikoski, 2010;Luft and Shields, 2009). These concepts are central to behavioural management research, which typically seeks to understand how humans behave in organizations, make decisions, estimate the future, evaluate the past under a variety of incentives.…”