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‘‘Order Effects’’ Revisited: The Importance of Chronology

‘‘Order Effects’’ Revisited: The Importance of Chronology. Michael Favere-Marchesi. Justification . When engaging in decision making it is important to understand if auditors Take into consideration the chronological order of the evidence (trend effect),

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‘‘Order Effects’’ Revisited: The Importance of Chronology

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  1. ‘‘Order Effects’’ Revisited:The Importance of Chronology Michael Favere-Marchesi

  2. Justification • When engaging in decision making it is important to understand if auditors • Take into consideration the chronological order of the evidence (trend effect), • Or are influenced the order of presentation of the data

  3. Research question • Whether awareness of the temporal order of evidence would prevent auditors from placing more subjective weight on evidence that they have most recently processed (in other words, whether a trend effect dominates the recency effect).

  4. Main Theories • Temporal order of events – which can suggest causal links (Teigen, 2004) • The belief-adjustment model, developed by Hogarth and Einhorn (1992) • Individuals process information sequentially when they are involved in evaluative tasks, and use an anchoring and adjustment strategy to incorporate new evidence. • Evidence chronology is important not only because it provides trend evidence but also due to recency effects (Hogarth 1987, Ricchuite 1998)

  5. Hypotheses • H1: Auditors who receive dated mixed evidence in which the trend and presentation order are consistent will exhibit either greater or equal recency than auditors who receive undated mixed evidence • H2: Auditors who receive dated mixed evidence in which the trend and presentation order are orthogonally varied will exhibit a trend effect rather than a recency effect.

  6. Research method • Sample – 109 partners and 71 senior managers from Big Five companies • 2X3 between subject design • Temporal order with favorable trend • Temporal order with unfavorable trend • No temporal order with two pieces of undated positive and negative evidence

  7. Results

  8. Results

  9. Results

  10. Results

  11. Results and Conclusions • H1: Supported - Recency effect was not significantly different between auditors evaluation undated evidence and those evaluation dated mixed evidence • H2: Supported – auditors consider the temporal order of the evidence in assessing a trend and they are not unduly influenced by the presentation order

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