Representations as decision aids: The asymmetric effects of words and numbers on auditors' inherent risk judgments

Decision Sciences

Volumn 28, Issue 3, 1997, Pages 709-743

  Dilla, William N ^a   Stone, Dan N ^b  

^a UNIVERSITY OF MISSOURI ST LOUIS   (United States)

^b UNIVERSITY OF ILLINOIS AT URBANA CHAMPAIGN   (United States)

Author keywords

Auditor judgment; Decision processes; Decision support systems; Information representation; Risk analysis

Indexed keywords

EID: 0039332054     PISSN: 00117315     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1540-5915.1997.tb01328.x     Document Type: Article

References (97)

1. Alba, J., & Hutchinson, W. (1987). Dimensions of consumer expertise. Journal of Consumer Research, 13(4), 411-454.
2. Alderman, C. W., & Tabor, R. H. (1989). The case for risk-driven audits. Journal of Accountancy, 167(3), 55-61.
3. American Institute of Certified Public Accountants (AICPA) (1991;. Professional standards, Vol. 1, U.S. auditing standards. Chicago: Commerce Clearing House, Inc..
4. Arens, A. A., & Loebbecke, J. K. (1991). Auditing: An integrated approach (5th ed.). Englewood Cliffs, N.J.: Prentice Hall.
5. Argenti, J. (1976). Corporate collapse: The causes and symptoms. New York: John Wiley.
6. Argenti, J. (1980). Practical corporate planning. London: George Allen &Unwin Ltd..
7. Artz, N., & Tybout, A. M. (1990). Numeric and verbal information: Implications for persuasion. Working paper, Northwestern University.
8. Ashton, A. H. (1974). An experimental study of internal control judgments. Journal of Accounting Research, 72(1), 143-157.
9. Ashton, A. H. (1985). Does consensus imply accuracy in accounting studies of decision making? The Accounting Review, 60(2), 173-185.
10. Ashton, R. H. (1983). Research in audit decision making: Rationale, evidence, and implications. Research Monograph Number 6. Vancouver: The Canadian Certified General Accountants' Research Foundation.
11. Ashton, R. H. (1992). Effects of justification and a mechanical aid on judgment performance. Organizational Behavior and Human Decision Processes, 52(2), 292-306.
12. Ashton, R. H., & Brown, P. R. (1980). Descriptive modeling of auditors internal control judgments: Replication and extension. Journal of Accounting Research, 18(1), 269-77.
13. Ashton, R. H., & Willingham, J. J. (1989). Using and evaluating audit decision aids. Proceedings: Touche Ross/University of Kansas Symposium on Auditing Problems, 1-25.
14. Barnett, V., & Lewis, T. (1984). Outliers in statistical data. Chichester: John Wiley.
15. Beach, L. R., & Mitchell, T. R. (1978). A contingency model for the selection of decision strategies. Academy of Management Review, 3(3), 439-449.
16. Bell, J. (1984). The effect of presentation form on the use of information in annual reports. Management Science, 30(2), 169-185.
17. Beyth-Marom, R. (1982). How probable is probable? A numerical translation of verbal probability expressions. Journal of Forecasting, 1, 257-269.
18. Bimberg, J. G. (1964). Bayesian statistics: A review. Journal of Accounting Research, 2(1), 108-116.
19. Bonner, S. E. (1990). Experience effects in auditing: The role of task-specific knowledge. The Accounting Review, 65(1), 1-20.
20. Bonner, S. E. (1991). Is experience necessary in cue measurement? The case of auditing tasks. Contemporary Accounting Research, 8(1), 253-269.
21. Bonner, S. E., & Pennington, N. (1992). Cognitive processes and knowledge as determinants of auditor expertise. Journal of Accounting Literature, 10, 1-50.
22. Bonner, S. E., & Walker, P. L. (1994). The effects of instruction and experience on the acquisition of auditing knowledge. The Accounting Review, 69(1), 157-178.
23. Boritz, J. E. (1985). The effect of information presentation structures on audit planning and review judgments. Contemporary Accounting Research, 1(2), 193-218.
24. Boritz, J. E., Gaber, B. G., & Lemon, W. M. (1987a). An experimental study of review of preliminary audit strategy by external auditors. The Canadian Academic Accounting Association: Toronto.
25. Boritz, J. E., Gaber, B. G., & Lemon, W. M. (1987b). Managing audit risk. CA Magazine, 120(1), 36-41.
26. Brum, W., & Teigen, K. H. (1988). Verbal probabilities: Ambiguous, context-dependent, or both? Organizational Behavior and Human Decision Processes, 41(3), 390-404.
27. Buckless, F. A., & Ravenscroft, S. P. (1990). Contrast coding: A refinement of ANOVA in behavioral analysis. The Accounting Review, 65(4), 933-945.
28. Canadian Institute of Chartered Accountants (CICA) (1980). Extent of Audit Testing - A Research Study. Toronto: CICA.
29. Castellan, N. J., Jr. (1992). Relations between linear models: Implications for the lens model. Organizational Behavior and Human Decision Processes, 51(3), 364-381.
30. Chesley, G. R. (1979). Procedures for the communication of uncertainty in auditors' working papers. In T. Burns (Ed.), Behavioral experiments in accounting II. Columbus, OH.: College of Administrative Science, The Ohio State University.
31. Chesley, G. R. (1985). Interpretation of uncertainty expressions. Contemporary Accounting Research, 2(1), 179-199.
32. Chi, M. T. H., Feltovich, P. J., & Glaser, R. (1981). Categorization and representation of physics problems by experts and novices. Cognitive Science, 5, 121-152.
33. Colbert, J. L. (1987). Audit risk-Tracing the evolution. Accounting Horizons, 1(3), 49-58.
34. Conover, W. J. (1980). Practical nonparametric statistics (2nd ed.). New York: John Wiley.
35. Cox, E. P. (1980). The optimal number of response alternatives for a scale: A review. Journal of Marketing Research, 17, 407-422.
36. Daniel, S. J. (1988). Some empirical evidence about the assessment of audit risk in practice. Auditing: A Journal of Practice and Theory, 7(2), 174-181.
37. Davis, J. S., & Solomon, I. (1989). Experience, expertise, and expert performance research in public accounting. Journal of Accounting Literature, 8, 150-164.
38. Dirsmith, M. W., & Haskins, M. E. (1991). Inherent risk assessment and audit firm technology: A contrast in world theories. Accounting, Organizations and Society, 16(1), 61-90.
39. Einhorn, H., & Hogarth, R. (1981). Behavioral decision theory: Processes of judgment and choice. Annual Review of Psychology, 32, 53-88.
40. Eining, M., Jones, D., & Loebbecke, J. (1994). An experimental examination of the impact of decision aids on the assessment and evaluation of management fraud. Working paper, University of Utah, Presented at the USC Audit Judgment Symposium.
41. Emby, C. (1993). An experimental test of a decision aid for sequential belief revision under uncertainty. Working paper, Simon Fraser University.
42. Emerson, J., & Strenio, J. (1983). Boxplots and batch comparison. In D. C. Hoaglin, F. Mosteller, & J. W. Tukey (Eds.), Understanding robust and exploratory data analysis. New York: John Wiley.
43. Fillenbaum, S., Wallsten, T. S., Cohen, B. L., & Cox, J. A. (1991). Some effects of vocabulary and communication task on the understanding and use of vague probability expressions. American Journal of Psychology, 104(1), 35-60.
44. Graham, L. E. (1985). Audit risk - Parts I-V. The CPA Journal, 55(8-11).
45. sm: An expert system for risk identification. Auditing: A Journal of Practice and Theory, 10(1), 69-96.
46. Hamm, R. (1991). Selection of verbal probabilities: A solution for some problems of verbal probability expression. Organizational Behavior and Human Decision Processes, 50(2), 193-223.
47. Hammond, K., Stewart, T., Brehmer, B., & Steinmann, D. (1975). Social-judgment theory. Human judgment and decision processes. New York: Academic Press, 271-312.
48. Hicks, E. L. (1974). Standards for the attest function. The Journal of Accountancy, 138(2), 39-45.
49. Hogarth, R. (1980). Judgement and choice. New York: Wiley.
50. Houghton, C. W, & Fogarty, J. A. (1991). Inherent risk. Auditing: A Journal of Practice and Theory, 10(1), 1-21.
51. Hylas, R. E., & Ashton, R. H. (1982). Audit detection of financial statement errors. The Accounting Review, 57(4), 751-765.
52. Janell, P., & Wright, A. (1991). Inherent risk and control environment assessment practices of major auditing firms: Implications for practice and future research. Working paper, Northeastern University.
53. Jaffe-Katz, A., Budescu, D. V., & Wallsten, T. S. (1989). Timed magnitude comparisons of numerical and nonnumerical expressions of uncertainty. Memory & Cognition, 17(3), 249-264.
54. Jiambalvo, J., & Waller, W. (1984). Decomposition and assessments of audit risk. Auditing: A Journal of Practice and Theory, 3(2), 80-88.
55. Johnson, E. J., & Payne, J. W. (1985). Effort and accuracy in choice. Management Science, 31(4), 395-414.
56. Kahneman, D. (1973). Attention and effort. Englewood Cliffs, NJ: Prentice-Hall.
57. Keasey, K., & Watson, R. (1989). Consensus and accuracy in accounting studies of decision making: A note on a new measure of consensus. Accounting, Organizations and Society, 14, 337-345.
58. Keppel, G. (1982). Design and analysis: A researcher's handbook (2nd ed.). Englewood Cliffs, NJ: Prentice-Hall.
59. Kleinmuntz, D. N., & Schkade, D. A. (1993). Information displays and decision processes. Psychological Science, 4(4), 221-227.
60. Leichti, J. L. (1986). How to evaluate inherent risk - And improve your audits. The Practical Accountant, 79(3), 60-64.
61. Libby, R. (1981). Accounting and human information processing: Theory and applications. Englewood Cliffs, NJ: Prentice-Hall.
62. Libby, R., & Libby, P. A. (1989). Expert measurement and mechanical combination in control reliance decisions. The Accounting Review, 64(4), 729-747.
63. Lichtenstein, S., & Newman, J. R. (1967). Empirical scaling of common verbal phrases associated with numerical probabilities. Psychonomic Science, 9(10), 563-564.
64. Lopes, L. L. (1987). Between hope and fear: The psychology of risk. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 20). New York: Academic Press, 255-295.
65. Mautz, R. K. (1975). Some observations on auditing research. The Journal of Accountancy, 140(4), 92-96.
66. McFadgen, D. N. (1994). Comments on when numbers are better than words: The joint effects of response representation and experience on inherent risk judgments. Auditing: A Journal of Practice and Theory, 13 (Supplement), 20-23.
67. McMillan, R. G. (1971). Tests for one or two outliers in normal samples with unknown variance. Technometrics, 13(1), 87-100.
68. Messier, W. F, Jr. (1995). Research in and development of audit decision aids. In R. H. Ashton & A. H. Ashton (Eds.), Judgment and decision-making research in accounting and auditing. New York: Cambridge University Press.
69. Nakao, M. A., & Axelrod, S. (1983). Numbers are better than words: Verbal specifications of frequency have no place in medicine. American Journal of Medicine, 74, 1061-1065.
70. Payne, J. W. (1982). Contingent decision behavior. Psychological Bulletin, 92(2), 382-402.
71. Payne, J. W., Bettman, J. R., &Johnson, E. J. (1988). Adaptive strategy selection in decision making. Psychological Bulletin, 92(2), 382-402.
72. Payne, J. W., Bettman, J. R., & Johnson, E. J. (1992). Behavioral decision research: A constructive processing perspective. Annual Review of Psychology, 43, 87-131.
73. Reimers, J. (1992). Additional evidence on the need for disclosure reform. Accounting Horizons, 6(1), 36-41.
74. Reimers, J., Wheeler, S., & Dusenbury, R. (1993). The effect of response mode on auditors' control risk assessments. Auditing: A Journal of Practice and Theory, 12(2), 62-78.
75. Rittenberg, L. E., & Schwieger, B. J. (1994). Auditing: Concepts for a changing environment. Fort Worth, TX: Dryden.
76. Russo, J. E., & Dosher, B. A. (1983). Strategies for multiattribute binary choice. Journal of Experimental Psychology: Learning, Memory, and Cognition, 9(4), 676-696.
77. Schkade, D., & Kleinmuntz, D. (1994). Information displays and choice processes: Differential effects of organization, form, and sequence. Organizational Behavior and Human Decision Processes, 57(3), 319-337.
78. Snedecor, G. W, & Cochran, W. G. (1989). Statistical methods (8th ed.). Ames, IA: Iowa State University Press.
79. Stewart, T. R., Heideman, K. F., Moninger, W. R., & Reagan-Cirincione, P. (1992). Effects of improved information on the components of skill in weather forecasting. Organizational Behavior and Human Decision Processes, 53(2), 107-134.
80. Stone, D. N., & Dilla, W. N. (1996). The effects of task-specific structure on inherent risk judgment consensus. Working paper, University of Illinois.
81. Stone, D. N., &Schkade, D. A. (1991). Numeric and linguistic information repre-sentation in multiattribute choice. Organizational Behavior and Human Decision Processes, 49(1), 42-59.
82. Sujan, H., Sujan, M., &Bettman, J. R. (1988). Knowledge structure differences between more effective and less effective salespeople. Journal of Marketing Research, 25(1), 81-86.
83. Svenson, O., &Karlsson, G. (1986). Attractiveness of decision alternatives charac-terized by numerical and nonnumerical information. Scandinavian Journal of Psychology, 27, 74-84.
84. Tan, J. K. H., & Benbasat, I. (1993). The effectiveness of graphical presentation for information extraction: A cumulative experimental approach. Decision Sciences, 24, 167-191.
85. Todd, P., & Benbasat, I. (1991). An experimental investigation of the impact of computer based decision aids on decision making strategies. Information Systems Research, 2(2), 87-115.
86. Todd, P., & Benbasat, I. (1992). The use of information in decision making: An experimental investigation of the impact of computer-based decision aids. MIS Quarterly, 16(3), 373-393.
87. Tukey, J. W. (1977). Exploratory data analysis. Reading, MA: Addison-Wesley.
88. Waller, W. S. (1991). Auditors'risk assessments: Effects of task experience, conditioning information, and precision on second-order uncertainty. Working paper, University of Arizona.
89. Waller, W. S. (1994). A behavioral-economics approach to auditors' risk assessments. In R. Srivastava (Ed.), Proceedings: Deloitte and Touche/University of Kansas Symposium on Auditing Problems.
90. Wallsten, T. S. (1990a). Measuring vague uncertainties and understanding their use in decision making. In G. von Furstenberg (Ed.), Acting under uncertainty: Multidisciplinary conceptions. Boston: Kluwer Academic Publishers, 377-398.
91. Wallsten, T. S. (1990b). The costs and benefits of vague information. In R. Hogarth (Ed.), Insights in decision making: Theory and applications. Chicago: University of Chicago Press.
92. Wallsten, T. S., Budescu, D. V, Rapoport, A., Zwick, R., & Forsyth, B. (1986). Measuring the vague meanings of probability terms. Journal of Experimental Psychology: General, 115(4), 348-365.
93. Wallsten, T. S., Budescu, D. V., & Zwick, R. (1993). Comparing the calibration and coherence of numerical and verbal probability judgements. Management Science, 39(2), 176-190.
94. Wallsten, T. S., Budescu, D. V., Zwick, R., & Kemp, S. M. (1993). Preferences and reasons for communicating probabilistic information in verbal or numerical terms. Bulletin of the Psychonomic Society, 31(2), 135-138.
95. Willingham, J. J., & Wright, W. F. (1984). Estimation of errors in financial statements. In A. R. Abdel-Khalik & I. Solomon (Eds.), Proceedings, University of Illinois Auditing Research Symposium.
96. Wright, A., & Ashton, R. H. (1989). Identifying audit adjustments with attention-directing procedures. The Accounting Review, 64(4), 710-728.
97. Yates, J. F. (Ed.). (1992). Risk-taking behavior. New York: John Wiley.