Can neuroscience inform management accountants? | CIMA Financial Management Magazine - 1 views
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neuroscience management financial management accountants
shared by David McGavock on 22 Jun 12
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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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Management accountants need to consider what kind of presentation of information may reduce hidden fear and anxiety.
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Management accountants need to provide management with overviews of the inter-temporal consequences of managerial decisions
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People simply have such a strong preference for sooner rather than later (positive) outcomes that it appears to be hard to change that.
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Neuroscientific research may provide a starting point in the analysis and solution of this problem, as its results suggest that humans’ preference for short-term outcomes is the consequence of the emotional system’s strong response to immediate, rather than to delayed, rewards.
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When applying neuroscientific methods for fundamental or applied research, management accountants have to deal with at least four challenges.
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First, neuroscience requires a mastery of observation techniques that are not the normal repertoire of social researchers
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Second, given the technological complexities of neuroscientific research, it is crucial to develop cooperation in multidisciplinary teams consisting of neurologists, economists and psychologists, as well as management accountants.