An Examination Of Similarity Strategy For Individual and Group Decision Making in Choosing Alternatives Involving Two Sequential Independent Events. Analisis Similarity Strategy untuk Pengambilan Keputusan Individu dan

• Main Author: Perpustakaan UGM, i-lib
• Format: Article NonPeerReviewed
• Published: [Yogyakarta] : Sekolah Pascasarjana Universitas Gadjah Mada 2003
• Subjects: Jurnal i-lib UGM
• Online Access: https://repository.ugm.ac.id/19702/; http://i-lib.ugm.ac.id/jurnal/download.php?dataId=2535
• Institution: Universitas Gadjah Mada

ABSTRACTWhen providing a user with data, an accountant often must choose the proper level of report aggregation. Research in accounting has shown that the level of aggregation can affect the behavior of the decision maker. For example, when the decision maker is faced with choosing alternatives each of which involves two sequential independent events. Moser et al. (1994) found that individuals prefer the alternative for which the difference between the probabilities of success for the two independent events is small relative to the other alternative. The strategy that uses this pattern in decision-making is called the similarity strategy. In investment decision cases, a group makes most of the decisions. Stoner (1961) found that group decision-making was more extreme than individual. Therefore it is important to consider group decision-making in investment cases.The purpose of this study is to investigate the similarity strategy, which was introduced by Moser et al. (1994). Testing is not only aimed at individual decision-making but also at group decision-making. Thirty-six graduate students in the management and accountancy departments participated in a laboratory experiment with investment decision setting. The results of the analysis support the similarity hypothesis. Under condition of joint probability, the similarity strategy used by groups is more pronounced than that used by individual (support Stoner, 1961), but not in the case of unequal joint probability. This result implies that when making an investment decision involving sequential events, group and individual decision-making will follow a particular pattern that does not conform to normative decision theory. Keywords: similarity strategy -- individual and group decision-making -- two sequential independent events.