Effects of time pressure and erroneous information on decision-making

• Main Authors: San, Chiah Chai, Seng, Fong Wai, Fui, Yee Kum
• Other Authors: Tan Hun Tong
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Business::Accounting
• Online Access: http://hdl.handle.net/10356/55533
• Institution: Nanyang Technological University

Time budgets are commonly used by accounting firms to control costs. Tight deadlines and stress as a result of tight time budgets have been a well recognised problem in the auditing profession. The current study examined i) the effects of erroneous information and time pressure on audit judgement, and ii) the effects of time pressure at the encoding and decision-making stages on performance. The first experiment examined how subjects would perform under time pressure upon realization that information presented to them earlier were erroneous. The results indicated that subjects could not give adequate discounting of erroneous information and this situation worsened when time pressure was imposed at the decision-making stage. The second experiment examined subjects' recognition ability under time pressure. The analysis indicated that subjects performed badly when high time pressure was imposed at both encoding and decision-making stages. On the other hand, subjects performed best when low time pressure was imposed at both encoding and decision-making stages. Most interestingly, the results suggested that subjects who encoded the information under high time pressure but made decision under low time pressure performed worse than subjects who made decision under high time pressure but encoded the information under low time pressure.