The significance of outcomes, mental accounting, framing and anchoring & adjustment on performance evaluation

• Main Authors: Chong, Boon Hwee, Goy, Siang Boon, Ong, Charles Hai Beng
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/58570
• Institution: Nanyang Technological University

This study attempts to do three things. Firstly, it examines the Outcome Effect in evaluating variance investigations. Secondly, it tries to explain the Outcome Effect through the following cognitive links: ( 1) the outcome of an investigation will have an impact on the perceived benefits of, the investigation, (2) investigation expenditure matched with perceived benefits are framed as costs while those without perceived benefits are framed as losses, and (3) a cost frame results in a higher performance rating compared to a loss frame. Thirdly, the study attempts to show the weakening effect that Anchoring and Adjustment may have on the Outcome Effect. The results failed to support the existence of the Outcome Effect and hence not surprisingly, the claim that a cost frame results in a higher performance rating was not supported too. On the other hand, it was found that there was partial support in the claim that the outcome affects the amount of benefits perceived and it was also concluded successfully that investigation expenditure matched with perceived benefits are framed as costs while those without perceived benefits are framed as losses. With regards to the study on the effect of Anchoring and Adjustment, the results fail to show the weakening effect that it should have on the Outcome Effect as theorized, but it should not be taken that Anchoring and Adjustment would have no weakening effect on the Outcome Effect as the successful proof of this effect is partly dependent upon of the Outcome Effect which was not demonstrated by this study.