ABSTRACT
This chapter provides a selective overview of judgment and decision-making (JDM) research in accounting and its roots in psychology with a focus on understanding how judgments and decisions are made and how they may be improved. We examine the dual-process model of cognitive processing that distinguishes between automatic and heuristic (System 1) processes and effortful and analytic (System 2) processes that individuals use to make judgments and decisions. Although largely functional, we discuss how these processes may result in biased judgments and decisions. We consider a framework for improving JDM and review select research in accounting that examines interventions that can help avoid or correct judgment errors. Finally, we offer some guidance for new behavioural researchers in applying the dual-process model to accounting contexts, where appropriate.
