Can neuroscience inform management accountants? | CIMA Financial Management Magazine - 1 views
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In business we regularly have to consider what level of risk is acceptable to the organisation. Management control systems typically assume that people adhere to some rational decision rules and are able to estimate the probabilities and values of future outcomes.
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Pre-neuro behavioural studies have shown that this is most often not the case. Moreover, the way in which alternatives to a decision are presented to people affects their opinion about them and their choice between them.
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Behavioural economics shows that if alternatives are framed as gains, decision-makers usually opt for safer options, thereby exhibiting risk-averse behaviour, but they reverse their choice when alternatives are framed as losses.
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