TEST BANK For Mintz, Ethical Obligations & Decision-
Making in Accounting Text & Cases 6th Edition
Behavioral Ethics - ANSWER:emphasizes the need to consider how individuals
actually make decisions, rather than how they would make decisions in an ideal
world.
System 1 Thinking - ANSWER:intuitive system of processing information: fast,
automatic, effortless, and emotional decision processes
System 2 Thinking - ANSWER:slower, conscious, effortful, explicit, and a more
reasoned decision process.
Cognitive Errors (Shortcomings) - ANSWER:the tangible and the abstract, loss
aversion, framing, and overconfidence
The Tangible & The Abstract - ANSWER:when people make ethically tinged decisions,
they tend to consider immediate and tangible factors at the expense of more
removed and abstract factors.
Loss Aversion - ANSWER:people have a tendency to detest losses even more than
they enjoy gains so that they make more immoral decisions to avoid what they
perceive to be a potential loss.
Framing - ANSWER:people have a tendency to make different decisions based upon
how a question is framed so that other factors are framed as more important than
ethical standards.
Overconfidence - ANSWER:People have a tendency to believe that they are more
ethical than they actually are, which can cause them to make decisions with serious
ethical implications without proper reflection.
Incrementalism - ANSWER:may influence the behavior of even well-intentioned
people who find themselves in situations in which ethical corners are being cut. it
can be difficult to notice gradual changes in one's environment so that cutting
corners grow until violations of the law occur.
Social and Organizational Pressures - ANSWER:tendencies to be overly obedient to
authority and to conform excessively to the ethical judgements and actions to peers
Situational Factors - ANSWER:influence ethical decision making and the actor may
not even be aware of the effect.
, Cognitive Dissonance - ANSWER:inconsistency between our thoughts, beliefs, or
attitudes and our behavior creates the need to resolve contradictory or conflicting
beliefs, values, and perceptions.
How to reduce dissonance? (Festinger) - ANSWER:change one or more of the
attitudes, behavior, or beliefs so as to make the relationship between the two
elements a consonant one
acquire new information that outweighs the dissonant beliefs
reduce the importance of the cognitions
Cognitive Biases - ANSWER:beliefs or thoughts about the world, other people, and
ourselves which can negatively influence our decision-making process.
Theories About the World - ANSWER:tend to blame individuals for events, rather
than their work environment, policies and procedures, or incentive programs.
Issues with Theories About the World - ANSWER:underestimating risk and making
poor decisions by ignoring low-probability events
failing to identify all stakeholders impacted
ignoring the possibility the public will find out
not thinking about about long-term consequences
undervaluing the magnitude of the consequences in total
Theories About other People - ANSWER:tendency to think of themselves and the
groups they belong to or share their beliefs with as better than those they don't
belong to whether based on factors of race, religion, nationality, political affiliation,
etc.
Ethnocentrism - ANSWER:perception that "our way" is normal and preferred and
that other ways are somehow inferior
Theories About Ourselves - ANSWER:includes hindsight bias, superiority bias,
overconfidence bias, group think
Hindsight Bias - ANSWER:tendency to overestimate positive traits and to
underestimate our weaknesses; tendency to view events as more predictable than
they really are
Superiority Bias - ANSWER:executives become overconfident in their abilities and
make decisions based on incomplete or inaccurate information
Making in Accounting Text & Cases 6th Edition
Behavioral Ethics - ANSWER:emphasizes the need to consider how individuals
actually make decisions, rather than how they would make decisions in an ideal
world.
System 1 Thinking - ANSWER:intuitive system of processing information: fast,
automatic, effortless, and emotional decision processes
System 2 Thinking - ANSWER:slower, conscious, effortful, explicit, and a more
reasoned decision process.
Cognitive Errors (Shortcomings) - ANSWER:the tangible and the abstract, loss
aversion, framing, and overconfidence
The Tangible & The Abstract - ANSWER:when people make ethically tinged decisions,
they tend to consider immediate and tangible factors at the expense of more
removed and abstract factors.
Loss Aversion - ANSWER:people have a tendency to detest losses even more than
they enjoy gains so that they make more immoral decisions to avoid what they
perceive to be a potential loss.
Framing - ANSWER:people have a tendency to make different decisions based upon
how a question is framed so that other factors are framed as more important than
ethical standards.
Overconfidence - ANSWER:People have a tendency to believe that they are more
ethical than they actually are, which can cause them to make decisions with serious
ethical implications without proper reflection.
Incrementalism - ANSWER:may influence the behavior of even well-intentioned
people who find themselves in situations in which ethical corners are being cut. it
can be difficult to notice gradual changes in one's environment so that cutting
corners grow until violations of the law occur.
Social and Organizational Pressures - ANSWER:tendencies to be overly obedient to
authority and to conform excessively to the ethical judgements and actions to peers
Situational Factors - ANSWER:influence ethical decision making and the actor may
not even be aware of the effect.
, Cognitive Dissonance - ANSWER:inconsistency between our thoughts, beliefs, or
attitudes and our behavior creates the need to resolve contradictory or conflicting
beliefs, values, and perceptions.
How to reduce dissonance? (Festinger) - ANSWER:change one or more of the
attitudes, behavior, or beliefs so as to make the relationship between the two
elements a consonant one
acquire new information that outweighs the dissonant beliefs
reduce the importance of the cognitions
Cognitive Biases - ANSWER:beliefs or thoughts about the world, other people, and
ourselves which can negatively influence our decision-making process.
Theories About the World - ANSWER:tend to blame individuals for events, rather
than their work environment, policies and procedures, or incentive programs.
Issues with Theories About the World - ANSWER:underestimating risk and making
poor decisions by ignoring low-probability events
failing to identify all stakeholders impacted
ignoring the possibility the public will find out
not thinking about about long-term consequences
undervaluing the magnitude of the consequences in total
Theories About other People - ANSWER:tendency to think of themselves and the
groups they belong to or share their beliefs with as better than those they don't
belong to whether based on factors of race, religion, nationality, political affiliation,
etc.
Ethnocentrism - ANSWER:perception that "our way" is normal and preferred and
that other ways are somehow inferior
Theories About Ourselves - ANSWER:includes hindsight bias, superiority bias,
overconfidence bias, group think
Hindsight Bias - ANSWER:tendency to overestimate positive traits and to
underestimate our weaknesses; tendency to view events as more predictable than
they really are
Superiority Bias - ANSWER:executives become overconfident in their abilities and
make decisions based on incomplete or inaccurate information
