The Impact of Affective Reactions on Risky Decision Making in Accounting Contexts

In this study we examine whether managers' affective reactions influence their risk–taking tendencies in capital budgeting decisions. Prior research on risky decision making indicates that decision makers are often risk averse when choosing among alternatives that yield potential gains, and risk taking when the alternatives yield losses. The results reported here indicate that negative or positive affective reactions can change this commonly found risky behavior. Managers were generally risk avoiding (taking) for gains (losses) in the absence of affective reactions, as predicted by prospect theory. However, when affect was present, they tended to reject investment alternatives that elicited negative affect and accept alternatives that elicited positive affect, resulting in risk taking (avoiding) in gain (loss) contexts. The results also indicate that affective reactions can influence managers to choose alternatives with lower economic value, suggesting that managers consider both financial data and affective reactions when evaluating the utility of a decision alternative. These findings point to the importance of considering affective reactions when attempting to understand and predict risky decision making in accounting contexts.     

Evidence of Choice Avoidance in Capital‐Investment Judgements*

Evaluating capital‐investment decisions is an important function of managerial accountants. There is anecdotal evidence, however, that managers avoid making decisions or delay decisions, which is costly in terms of time, effort, and lost opportunities. Prior research has shown that choice avoidance among nonprofessionals making personal decisions is associated with having to choose between alternatives with very different features or that require trade‐offs of very important goals (choice difficulty). It is unclear, however, whether experienced managers, using the analytical decision tools at their disposal, respond in the same way as nonprofessionals when making accounting decisions. Hence, this study examines whether increased choice difficulty increases negative affect in the capital‐investment decision‐making process and, as a result, the tendency of managers to avoid choice even when analytical decision tools are used. In an experiment with 120 executives, participants facing more difficult decisions reported they felt more worried, nervous, uneasy, and anxious and had a greater desire to postpone making the decision than participants in a control group. Participants provided with a decision aid designed to help them focus their cognitive effort reported a lower desire to postpone making the decision than participants in the choice‐difficulty conditions without the decision aid. I conclude by discussing the result's implications for managers and accountants.     

Determinants of Leisure Time Physical Activity Participation Among Latina Women

The goal of this study was to examine leisure time physical activity (LTPA) among Latina women and to determine factors influencing their LTPA participation. The ecological model was employed as a theoretical framework in order to examine attitudes, social support, and constraints affecting physical activity. Surveys and in-depth interviews were used to collect data. Results showed that although women's LTPA participation was low, they had positive attitudes toward LTPA, and they believed they had high levels of support for LTPA. The most often mentioned constraints included lack of child-care and lack of time. Attitudes toward LTPA, social support for LTPA, and certain constraints were significant predictors of LTPA participation. Results of the in-depth interviews complemented the survey data.     

What keeps them going? Socio-cognitive entrepreneurial career continuance

Small Business Economics - Previous studies suggest that individual career satisfiers such as earning wealth and developing relationships with employees are important drivers of intentions to start...     

Overcoming the “recency trap” in customer relationship management

Purchase likelihood typically declines as the length of time since the customer’s previous purchase (“recency”) increases. As a result, firms face a “recency trap,” whereby recency increases for customers who do not purchase in a given period, making it even less likely they will purchase in the next period. Eventually the customer is effectively lost to the firm. We develop and illustrate a modeling approach to target a firm’s marketing efforts, keeping in mind the customer’s recency state. This requires an empirical model that predicts purchase likelihood as a function of recency and marketing, and a dynamic optimization that prescribes the most profitable way to target customers. In our application we find that customers’ purchase likelihoods as well as response to marketing depend on recency. These results are used to show that the targeting of email and direct mail should depend on the customer’s recency and that the optimal decision policy enables the average high recency customer, who currently is virtually worthless to the firm, to become profitable.     

Beyond the lamppost: Optimal prevention and control of the Brown Tree Snake in Hawaii

We develop an integrated model for the prevention and control of an invasive species. The generality of the model allows its use for both existing and potential threats to the system of interest. The deterministic nature of arrivals in the model enables clear examination of the tradeoffs inherent when choosing between prevention and control strategies. We illuminate how optimal expenditure paths change in response to various biological and economic parameters for the case of the Brown Tree Snake in Hawaii. Results suggest that it is more advantageous to spend money finding the small population of snakes as they occur than attempting to prevent all future introductions. Like the drunk that looks for his keys only where the light is, public policy may fail to look “beyond the lamppost” for snakes that have already arrived but have not yet been detected. Actively searching for a potential population of snakes rather than waiting for an accidental discovery may save Hawaii tens to hundreds of millions of dollars in future damages, interdiction expenditures, and control costs.     

“When Life Gives You Lemons”: Using Cross-Sectional Surveys to Identify Chronic Poverty in the Absence of Panel Data

At the core of poverty eradication is the need to eliminate that poverty that is persistent over time (chronic poverty). Unfortunately, traditional approaches to identifying chronic poverty require longitudinal data that is rarely available. In its absence, this paper proposes an alternative approach that only requires 1 year of cross-sectional data on monetary and non-monetary poverty. It puts forth two conjectures and contends that the combined profile of a household as both income poor and multidimensionally poor can be used as a proxy of that household being chronically income poor. To explore the viability of this approach, we use a probit model and longitudinal data for three Latin American countries to estimate households’ probabilities of remaining in income poverty based on their past income and multidimensional poverty statuses. We find empirical support for the approach that is significant, consistent across countries, and robust to various controls and periods of analysis.