Can process accountability mitigate myopic biases? An experimental analysis

Abstract

This paper examines the impact of process accountability on two biases causing myopic or short-sighted decision making. These biases are strong preferences for immediate and certain outcomes known as delay and risk aversion. We hypothesize that accountability alone is insufficient to undo the biases, but if coupled with a cue on subjective discount rates, it will attenuate biases. To analyze our research question, we used a within- and between-subjects experimental design (two accountability conditions compared with a non-accountability condition and with each other) with delay and probability discounting choice tasks involving 118 students of accounting, finance and management in an online experiment. In line with our hypotheses, we find that process accountability successfully reduces excessive delay and risk aversion only if it provides a cue about the subjective discount rate. We discuss the implications of our findings for management control.