Abstract This research tests a normative model of information evaluation as a descriptive representation of information evaluator (IE) behavior in judging the value of alternative information systems. The criterion of predictive ability was the principal basis for performing this test. Several methodological and design features were introduced which permitted a more rigorous test than was possible in previous studies, IEs specified the amount that they would pay for an information system consisting of a single marble drawn from one of two urns containing many black and white marbles. The sample result was provided to a decision maker who decided from which urn the marble was drawn. Five levels of priors, information system accuracy, and three types of decisionmaker models were experimentally manipulated. The results were inconsistent with the predictions of the normative model. Among the alternative representations we tested, IE behavior was best represented by a multiplicative composition of priors, accuracy, and type of decision maker.

Abstract ABSTRACT: This paper reports the results of an experiment to test four models of the principal's information evaluation behavior in a private, pre-decision, principal-agency setting, The four models tested were an expected utility model, a prospect theory model, a linear model and a multiplicative model. In response to recent criticism that tests of positive theories in accounting lack sufficient power to discriminate among competing theories, the tests of the models were designed to disconfirm the models' predictions without assuming initial conditions. The model which best resisted the attempts to falsify it was the multiplicative model. The results demonstrate the generalizability of theories of information evaluation behavior from an information evaluator-decision maker setting to a principal-agency setting and show that the descriptive validity of principal-agency theory can be enhanced by incorporating models of individual behavior other than those based on expected utility theory. The study also provides a rigorous test of prospect theory and offers guidance for the future development of this theory.

[This paper reports the results of an experiment to test four models of the principal's information evaluation behavior in a private, pre-decision, principal-agency setting. The four models tested were an expected utility model, a prospect theory model, a linear model and a multiplicative model. In response to recent criticism that tests of positive theories in accounting lack sufficient power to discriminate among competing theories, the tests of the models were designed to disconfirm the models' predictions without assuming initial conditions. The model which best resisted the attempts to falsify it was the multiplicative model. The results demonstrate the generalizability of theories of information evaluation behavior from an information evaluator-decision maker setting to a principal-agency setting and show that the descriptive validity of principal-agency theory can be enhanced by incorporating models of individual behavior other than those based on expected utility theory. The study also provides a rigorous test of prospect theory and offers guidance for the future development of this theory.]

Abstract ABSTRACT: The purpose of this study is to test the feasibility of using a model derived from the judgments of a group of tax experts in controlled experimental conditions to predict actual compliance behavior. A judgment model, using amount of income, source of income, penalty for cheating, and rate structure as independent variables, was derived from CPA tax professionals. The model then was used successfully to predict actual taxpayer compliance using IRS Taxpayer Compliance Measurement Program data. The model also was used to infer the relative importance of the determinants of taxpayer compliance used in the study. Source of income was found to be about three times more important than the next most heavily weighted variable. These results demonstrate the potential for employing a derived judgment model as an efficient means of predicting the effect of proposed changes in tax policy on taxpayer compliance.

[The purpose of this study is to test the feasibility of using a model derived from the judgments of a group of tax experts in controlled experimental conditions to predict actual compliance behavior. A judgment model, using amount of income, source of income, penalty for cheating, and rate structure as independent variables, was derived from CPA tax professionals. The model then was used successfully to predict actual taxpayer compliance using IRS Taxpayer Compliance Measurement Program data. The model also was used to infer the relative importance of the determinants of taxpayer compliance used in the study. Source of income was found to be about three times more important than the next most heavily weighted variable. These results demonstrate the potential for employing a derived judgment model as an efficient means of predicting the effect of proposed changes in tax policy on taxpayer compliance.]

Abstract. This paper examines the probability judgments made by auditors for their financial statement footnote disclosure decisions and their audit report additional paragraph decisions in the presence of material loss contingencies. In the United States these judgments are governed by SFAS No. 5 and SAS No. 58. Two prior studies have reported inconsistent results pertaining to the degree of compliance of auditors with the judgment and decision‐making process implied by SFAS No. 5. In contrast, SAS No. 58 has not previously been examined with respect to auditor compliance. Results from an experiment with 64 audit partners from six firms were consistent with the hypothesis that audit partners employ the same (compensatory) judgment process when making footnote disclosure decisions as when making additional paragraph decisions. This process led the partners to make judgments for the additional paragraph decision that were in accordance with SAS No. 58. In contrast, their judgments for the footnote disclosure decision were consistent with a decision theory model of auditor behavior rather than the noncompensatory process implied by SFAS No. 5. Additional aspects of the study pertain to the additional paragraph decision of auditors. Observed judgments for these decisions are consistent with the hypothesis that additional information is conveyed beyond that provided by only a footnote disclosure. This is contrary to some recent discussions of the standards. Résumé. Les auteurs étudient les jugements relatifs aux probabilités portés par les vérificateurs dans le cadre de leurs décisions relatives à la présentation des pertes éventuelles importantes sous forme de notes infrapaginales dans les états financiers ou de paragraphes supplémentaires dans le rapport des vérificateurs. Aux États‐Unis, ces jugements sont régis par le SFAS n o 5 et le SAS n o 58. Deux études antérieures ont donné des résultats dissemblables en ce qui a trait à la mesure dans laquelle les vérificateurs se conforment au processus de jugement et de prise de décisions que suppose le SFAS n o 5. Le respect par les vérificateurs des normes du SAS n o 58 n'a fait, quant à lui, l'objet d'aucune analyse. Les résultats d'une expérience menée auprès de 64 associés reponsables de la vérification dans six cabinets ont confirmé l'hypothèse selon laquelle les associés responsables de la vérification utilisent le même processus de jugement (compensatoire) lorsqu'ils décident de présenter les pertes éventuelles sous forme de notes infrapaginales que lorsqu'ils optent pour les paragraphes supplémentaires. Ce processus a amené les associés à porter des jugements pour l'ajout de paragraphes supplémentaires conformes au SAS n o 58. Par opposition, leurs jugements relatifs à la présentation sous forme de notes infrapaginales étaient conformes à un modèle de comportement du vérificateur inspiré de la théorie de la décision plutôt qu'au processus non compensatoire que suppose le SFAS n o 5. D'autres aspects de l'étude portent sur la décision des vérificateurs relative à l'ajout de paragraphes supplémentaires. Les jugements observés relativement à cette décision sont conformes à l'hypothèse selon laquelle d'autres renseignements sont transmis, outre ceux qui sont fournis par voie de simples notes infrapaginales. Ces résultats viennent contredire certaines analyses récentes portant sur les normes.