Methodological problems in functional fixation research: Criticism and suggestions

Methodological problems in functional fixation research: Criticism and suggestions

Accounting, Organizations andSocie...

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Accounting, Organizations andSocie
METHODOLOGICAL

Graduate

1986. @

0361~F&%2/86 sj.oo+.oo 1986Pergamon Press Ltd.

PROBLEMS IN FUNCTIONAL FIXATION RESEARCH: CRITICISM AND SUGGESTIONS

NEIL WILNER and JACOB BIRNBERG School of Business, University of Pittsburgh

Abstract Accounting researchers have long been interested in how users of accounting information process the information in making decisions. One line of research argues that users become “functionally fixated” on the outputs of accounting systems. This line of research argues that form rather than substance becomes more important to (fasted) decision makers. This paper reviews the methodology employed in the accounting studies done to date. It concludes that flaws in the methodology used in these studies prevent us from determining if fixation exists. More importantly, these methodological flaws prevent us from answering the question of Z&J, it exists. if it does. The paper offers an alternative methodology to the one currently employed which it is argued will provide insights into the question.

Accounting information systems traditionally have permitted alternative techniques for reporting the same event (e.g. MO vs fife inventory accounting, accelerated vs straight line depreciation). While theorists arguing for one or the other of the alternatives have suggested that their method is “correct,” the inability to achieve agreement has created a situation where comparability among the data provided by firms cannot be assumed to exist. The earliest behavioral accounting studies focused on such issues (e.g. Bruns, 1965; Dyckman, 1964). Their intent was to answer the question: Can the users discern what is happening when they are presented with firms using differing accounting techniques? Comparable problems exist within the internal accounting system. Particularly, the role of depreciation in decision making within the context of a pricing task has raised similar issues. Taken together the two problem areas raise a question which accountants find vexing. Can

users “see through” accounting rules and allocations? If a significant portion of the users cannot react to these situations, then the assumption that accounting data are useful is questionable and two new areas must be investigated: 1. How much flexibility can be permitted by accounting rulemakers? 2. Can we develop techniques to educate users or alert them to the problems? Ijiri et al. ( 1966) offered suggestions regarding the conditions under which the individuals processing accounting data might not make Ii111 use of that data. Drawing on earlier works in the psychology literature, Ijiri et al. ( 1966) argued that decision-makers often fail to look beyond the titles attached to accounting data outputs with the result that they can not distinguish between outputs (e.g. net income) whether calculated using accounting method A or accounting method B. They said the users becomefunctionaIly fixated on the outputs. Since such behavior could lead to sub-optimal allocations of wealth

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at the individual and aggregate levels, we wish to investigate this phenomenon further. ’ The purpose of this paper is to reflect on the methodology used in prior fixation studies in order to overcome some of the major shortcomings present in this literature. Our paper is organized in the following manner. The first section contrasts the psychological and accounting concepts of fixation. The second section reviews the major accounting studies in the area. The third section deals with questions of experimental design in the prior accounting studies on fixation. We conclude in this section that, under the best of circumstances, the methodology used can only say that fixated behavior exists. Under the worst of circumstances (which unfortunately were probably observed), this methodology leads to inappropriate conclusions regarding the existence of fixity. In the final section we offer a more appropriate approach for handling the “why” question which deals with the questions raised earlier concerning experimental design.

THE FIXATION PROBLEM: TWO PERSPECTIVES The accountants’ literature on furity flows from the early psychological work of Dunker ( 1945) and Luchins (1942). This background work has been reviewed extensively by Ashton ( 1976) Wilner & Birnberg ( 1984) Bloom et al. ( 1984) and Barnes St Webb (in press). The differences between the concepts investigated in the accounting literature and the psychology literature are striking. The most obvious difference between the functional fixation and the data fixation literature concerns the nature of the item being fixated upon. In the case of functional fixation the psychologists used objects such as medallions, strings and boxes to solve relatively

simple tasks. The data fixation experiments all used data to solve unstructured problems. Other (related) differences come about in the nature of the causal relationships between the objects and tasks to be solved and in the immediacy of feedback. In the functional fixation experiments the causal relationship between objects and solutions is clearer. Feedback is immediate, because the subject knows (s)he has or has not solved the task. In the data fixation studies the causal relationship between the data and the solution is not clear and indeed may never become clear to the subjects. Feedback to the subject, ifit is present. may not be immediate and may not be perceived as being linked to the task. To date the accounting literature has not established that the psychological phenomenon and the accounting phenomenon are the same. This does not mean that the accounting literature should not be concerned with fYrated behavior, but means that the Dunker/Luchins inspired psychology work may not be the appropriate works to draw upon [see Wilner & Birnberg ( 1984) for a more complete discussion]. The psychological study most clearly related to the problem studied by accountants is Knight (1960). Knight investigated the effect of successfully solving n water jug problems on the problem solving techniques used in trial nf 1. He found that a series of successes caused the subject to persist in his earlier behavior, inhibited his ability to see the alternative (correct) approach and even led to complex correct solutions to trivial problems in cases where the complex solution had been used successfully in the previous n trials. It is this notion of set which appears most compatible with the line of accounting research labeled functional or data fixation. These differences have not gone unnoticed in the accounting literature. Ashton ( 1976)

’ Lev & Ohlson ( 1982) in their summary of market based accounting rtxarch found s&Kent anomalous results reported in various studies to give credence to the notion that the market exhibits evidence of fixation. In this case the natural experiments conducted using data on the behavior of prices of securities listed on the stock exchange ftwnd that the market often did not see through accounting policy alternatives. The Lrv & Ohlson paper is significant because it says that fixation may in fact, have social welfare implications.

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reviewed them extensively before concluding that the line of research merited continued efforts. Chang 8: Birnberg ( 1977) and Bloom et al. ( 1984) reviewed the issue and concluded that the notion of set is critical to the phenomenon. Thus implicitly if not explicitly they may have shifted the rationale from functional fixation to the role of set in evoking schemas etc. to be used in problem solving settings. As Chang & Birnberg ( 1977, p. 301) note, the orientation critical to accounting research is the persistence of a habitual response in the face of a changed stimulus.

INTRODUCTION

TO THE LITERATURE’

Over the past decade the work in the area of data fixation has been strongly influenced by the work of Ashton ( 1976) and his introduction of the price setting paradigm. He looked at the model employed by (MBA) decision makers when making pricing decisions. A model of their behavior was estimated by linear regression. The inputs to the model were unit cost data, elasticity of demand for the product and the nature of the competition. The manipulated variable was unit price data. Each subject made thirty pricing decisions based upon absorption costing data/ direct costing data and combinations of the other two variables. The subjects then were given thirty new cases with costing method changed but retaininng the same combinations of the other two variables. If the decision model employed over each set of 30 decisions differed, the subject was not data fixated. Ashton found some evidence of fixation. Swieringa et al. ( 1978) and Dyckman et al. ( 1982 ) modified Ashton’s experimental design to handle some of Libby‘s (1976) criticisms. These studies also found some evidence of fixated behavior. Chang 8r Birnberg ( 197’) provided MBA sub’ (:h:mg K- Birnberg

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have identified

the remainder

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jects with a cost standard and a cost variance report. The subjects were asked ( 1) to indicate whether they would investigate the production process and (2) to indicate how large a variance would be necessary to justify an investigation. The authors found evidence for the existence of “weak form” data fixity when a change in the variance amount was introduced. The authors call a slight change in behavior the weak form of fixity as opposed to no change in behavior which they called the strong form of fixity. Abdel-Khalik & Keller (1979) conducted an experiment on data fixation using bank investment officers annd securities analysts. The study looked at the effects of a switch to lifo inventory accounting. In a period of rising prices, where inventory will not be liquidated, such a switch results in lower reported earnings and a higher cash flow. An investor who values the firm by discounting cash flows should value the firm higher after the switch. An investor fixated on accounting earnings should value the firm lower. The results of this study clearly evidenced that the subjects used unadjusted net income rather than cash flows in evaluating the securities. Two more recent studies have continued the focus on the presence of fixity in the pricing setting. Bloom et al. (1984) utilized the Ashton paradigm in both the traditional fashion (with individuals) and with groups. Their analysis moved beyond the criticisms of Libby and not only examined the stability of the decision model, but also examined the extent of that shift. As Chang & Bimberg noted (1977, pp. 30% 3 IO). some adjustment in the subject’s behavior (i.e. the price they set) is to be expected. The more significant question is, even in the face of a significant result using the Chow test, does the resulting shift in price represent an adequate modification in the subject’s behavior? Given the limitations inherent in the Ashton paradigm, any conclusion must be subjective.

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of their own. Functional

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fixation

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Bloom et al. ( 1984) in reviewing their evidence concluded that the extent of their subjects’ shifts in behavior was not sufftcient and, therefore, concluded that the subjects were furated. This is what Chang & Birnberg called the weak form of fixation. They found that the groups reflected a higher degree of furation than individuals. This could reflect, however, ‘the nature of the group task which included both the need to reach a decision within the group on a decision rule anda decision on the task. Barnes 81 Webb (in press) used managers from the commercial laboratories of two British public authorities. Their task involved acceptance or rejection of a new commercial project similar to actual projects evaluated by the managers. Barnes & Webb set out to test fvration in the accounting sense where a change in computational method is introduced and in the psychological sense where a new type of decision must be made based upon familiar accounting inputs. Their results evidence fixation in the accounting sense but not in the psychological sense. Since their total sample was only fifteen subjects, they were able to examine the nonfixated subjects and consider how they differed from those who were classified as fixated. They suggest that intelligence, decision criteria and experience could play a role in differentiating between fixated and non-fixated managers. Using a different paradigm than Ashton’s, an N.A.A. research study (McGee, 1984) found that loan offtcers exhibited fixation when considering the decision to make a loan to one or both of two software firms. The firms differed only in their software accounting policy. One, C, capitalized the software development costs and the other, E, expensed it. While the research was not reported from a perspective that considered data fixation, several of the findings are of interest. Over 60% favored C to E, while only 11% favored E and 13% of them found them to be equal. Another 13% felt that the software accounting policy was irrelevant to the lending issue. Over 60% were willing to loan funds to C, while only 27% were willing to loan funds to E.

Those who would grant C and/or E loans. charged C a significantly lower rate. Thus this study. which used a paradigm that is less amorphous than Ashton’s and more clearly suggests an appropriate criterion against which to measure fLuation, found fixation to be present. However, like many of the earlier disclosure studies (e.g. Dyckman, 1964; Abdel-khalik & Keller, 1979) the research implicitly or explicitly was concerned with the presence of fvration and its potential effects on the decisions, rather than how one could avoid the problem. Recent work in behavioral decision theory lends credence to the notion that the important issue is not whether behavior which might be called fixation exists, but why it exists and how it can be mitigated. These studies come under the heading of problem solving and are not constrained to looking at the types of problems examined in the Dunker/Luchins inspired works in psychology and the Ashton inspired works in accounting. Einhorn & Hogarth ( 198 1) review this literature. They break the processes of judgment and choice down into several interrelated subprocesses: information acquisition, evaluation, action, and feedback/learning. They cite evidence within each area of the limitations of humans as decision makers. Though this litera. ture does not deal with fixation per se, it does show that we can expect judgment/choice to be inhibited by many factors and should turn to the questions of why this happens and, in turn, how to design decision aids. A careful review of Ashton’s discussion leads to the significant point that the focus of the psychological literature was on a joint set of hypotheses. Thus the psychological studies on tixity simultaneously tested the joint proposition that fixation exists and that the researcher(s) had insights into its causes. In these studies the cause of fixity was typically a predisposition (called a “set”) to use a physical object to solve a problem. For example, a paper-weight might be a suitable substitute for a hammer if the subject could overcome his predisposition to look at the object’s normal function as a paperweight. Having established the existence to their

MI~THOI~OI.O~;I~:AI. PROBLEMS IN FUNCTIONAL FIXATION RESEARCH

satisfaction, psychological researchers then discarded the first question and turned to dealing with the issue of how fixity could be overcome. The question of “why” was important to psychologists because they believed knowledge of its cause was a prerequisite to solving functional fixation. Later psychological studies such as Adamson & Taylor ( 1954) and Flavel et al. ( 1958) investigated factors such as time and the number of “other functions” shown for the fixated object that affects the degree of fix&y. These later studies investigated various ways to provide hints or cues to direct subjects toward a solution and the strength of the cues required to overcome the set [see Wilner ( 1979) for a review]. In short. this line of psychological research was concerned, ultimately, with ways of removing furation. In contrast, most accounting researchers have spent their time still dealing only with the first question: does fixity exist? The recent series of papers dating from Ashton’s work have not offered explanations of the causes of the phenomenon or suggested ways to improve decision maker performances. Despite the popularity among accounting researchers of the question of whether decision makers are furated, the critical question would appear to be why at least a portion of decision makers exhibit fixation. Given that we know from various non-accounting studies that certain factors do inhibit creative problem analysis and solving. the role of accounting research should be to ascertain which of these inhibiting factors operate in the domain of accounting and to ascertain how we can reduce their detrimental effects. PROBLEMS IN DESIGN OF THE EXISTING STUDIES ON FIXATION The existing behavioral accounting studies of fixation can all be characterized as input-output studies. Lewis et al, (1983) point out that an inputoutput methodology can only infer the relationship between the data (inputs) presented and the judgments or responses (outputs) made by

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the decision-maker since human decision processes often reflect a complex network of interactive components. The use of an input-output methodology is especially troublesome when one wants to make statements about the cognitive process of a decision-maker. To conclude that a decision-maker is or is not fvrated the researcher must understand what the process being used is and where it might break down. Any divergence between the inputs and the expected outputs can only be attributed to the phenomenon of interest when all other possible causes can be ruled out. This is a necessary condition for a study to have internal validity. Even under the best circumstances a researcher can usually only conclude that the process has broken down but not say why. For this reason we feel that the existing fixation studies cannot make any assurances that the behavior they observe is, in fact, a failure to overcome a set. These studies’ conclusions are based on observations where information processing is not altered after an accounting change. The researchers attribute this to fixation. We present alternative reasons why someone may fail to alter his information processing and yet not be fixated. We use Fig. 1 to explain our concerns. In these studies a decision maker is presented with a decision to be made. The subjects have prior experiences and knowledge which affects their responses. Random assignment of subjects to tasks is used to lessen the effects of these individual differences. Random assignment cannot overcome systematic characteristics which prevent all subjects from understanding the task. We believe that there are problems in some of the studies in using subjects not sophisticated enough for the task. A necessary condition for a fixation study is to use subjects capable ofunderstanding the status quo and capable of understanding the accounting change which will be introduced. The Swieringa et al. ( 1979) and Dyckman et al. ( 1982) studies must be interpreted in this light. Some qualification must be given to these studies’ results since there is evidence that their subjects did not understand the task. The subjects for the 1979 (Swieringa et al.) were study undergraduate introductory

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accounting students. Rather than conclude that they were fixated, it may be concluded they were naive or ignorant. Examination of their Table 6, (p. 24 1) reveals that nearly 45% of control subjects (25 out of 56) altered their information processing even though no change in information was given them. The 1982 study is an attempt to implement the modified Ashton framework with less subject surrogation problems. Graduate students with more accounting and business related courses were used. ‘Again a substantial number of control subjects (seven out of seventeen) altered their information processing for no apparent (or explained) reason. Our second concern relates to the lack of feedback to subjects in the existing studies. While feedback is not inherent in every decision situation, it is critical to fixation studies.’ The feedback loop in Fig. 1 signifies that in many decision contexts one can learn about the consequences of prior decisions. This feedback information about the quality of prior decisions may be a useful signal that the decision process needs adjustments or that it should be left alone. The

furation hypothesis rests on the assumption that a user of accounting information becomes accustomed over time to using the data prepared, say, under a consistent application of GAAP and, when an accounting change is made, the user fails to adjust the data or his decision model to reflect the change in GAAP. All of the accounting studies try to simulate the pre and post (accounting) change environment with numerous trials each period. However, the studies are designed so that they provide no feedback to the subject after each trial or after completing the set of pre or post change trials. As a result, the subjects never know iftheir behavior was appropriate. So for example, in the Ashton paradigm there is no feedback to assist the subjects in developing their decision model. Without knowing whether they were using an appropriate decision model to begin with, the task of changing that model becomes even more problematic. This problem is compounded by the fact that many of the tasks selected for these studies (e.g. the Ashton paradigm) are all judgmental and no optimal (or even right or

’ Note that in the studies in psychology the subject does a single trial of the task and knows at all times if there has been a successful completion of the task. The prior set is assumed to exist from everyday experience. In accounting studies, particularly with the Ashton paradigm. the prior set must be established in the subject by the experimenter.

~1ETHOl~OI.O~;I~:Al. PROBLEMS IN FI!N<:TIONAI.

wrong) answers exist. Thus, when subjects are not given feedback in the pre-accounting change period, they do not know how effective their original decision strategy was and have no idea of how to change it.’ Our third concern relates to the subjects’ awareness of the accounting change which must be present. It is understood in the accounting studies that bells and whistles appear important to the recognition that such changes exist (Ijiri et al., 1966). Failure to provide cues clearly can lead to inappropriate information processing, but this is not true fixation. All of the accounting studies do provide the bells and whistles and we would feel uncomfortable if we did not point this out. We have, however, illustrated another point where fixated behavior may beconcluded from an input-output study when it has not been observed. Another concern relates to the possibility that, given a knowledgeable subject who is attendant to an accounting change, a change in a decision (model) may not follow the aforementioned change for reasons other than fmation. The subject has had experiences which i&uence the ability to respond through prior knowledge and which may have led to preconceived notions, called mental sets, on how to respond. These conditions, existing in the decision-maker before the decision situation, can affect the way the task instructions and the problem itself are understood (see Dearborn & Simon, 1958). Hayes & Simon (1979) studied how people respond to changes in the wording of problems which do not change the underlying structure of the problem or the appropriate solution technique. They found that “obvious” similarities and “trivial” differences may be more “obvious” and “trivial” to the experimenter than to the subjects. As noted in Fig. 1, a subject may decide that the accounting change relates to a piece of data which is irrelevant to his decision. This would result in a perceived problem understanding different from the one intended by the experi-

FIXATION

REWARCH

7’

menter. For instance, in the Abdel-khalik & Keller ( 1979) study, the change in inventory method is supposed to lead to a change in valuation of potential investments. Perhaps we should worry about the possibility that on-the-job behaviors of the subjects do not include life-fifo adjustments since other factors may dominate that adjustment or more accessible data may be highly correlated with the lifo-f&o effect in real world data sets. As a result the lifo-fife adjustment may be left out of the manipulation of the experimental data sets by the subjects. Even if the subject concludes that the accounting change coz& be relevant to the decision at hand, we may find that the behaviors he evokes to solve the problem remain unchanged (see Fig. 1). This could happen if he concludes that changing the decision process to accommodate the newly prepared data is not worthwhile because the subject does not expect that it would lead to a different decision from the original process. The subject is in error but not fmated. Finally, with respect to Fig. 1, it may be costly to the decision maker to process the accounting change. One may know that a change from absorption costing to direct costing affects unit costs. But it may then take time and effort to understand the full implication of the change. The subject makes an ex ante cost-benefit tradeoff and may decide that the benefits of “better” decisions will not outweigh the costs of learning how to process the change. Another concern of ours (not specifically shown in Fig. 1) is the possibility that it is beneficial to the subject-decision-maker to act in a “fixated” manner. The information inductance hypothesis (Prakash & Rappaport, 1977) says, in essence, that a decision-maker, knowing all about the change in the environment and fully understanding it, may still act as if he were fixated because he is an information sender as well as an information user. In his role as a sender of information he wants to communicate a

’ We recognize the possible concerns about the usefulness of feedback when there is no one right answer. In many real world decisions. cause and effect are hard to establish and yet the decision-maker gets feedback in the form of performance evaluations, raises. promotions. etc. which indicate whether prior decisions have been. at minimum, satisfactory.

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specific message which will be used to evaluate his performance and reward or punish him. The person(s) to whom he sends the information may in his opinion be fvrated and, therefore, the sender must also act furated. Wilner ( 1982) provides evidence of inductance in a different context which studies reactions to SFAS 8. Our final concern relates to the possibility of subjects forming a “set” which they cannot overcome. Clearly this is the meaning of fixation according to Ijiri et al. ( 1966) and the phenomenon of interest to Ashton ( 1976) and the studies inspired by Ashton. Unfortunately, set is not an unambiguous phenomenon. Luchins ( 1942) found that set was induced by repeated successes with a particular problem solving technique. Problem solvers in those studies were found to persist in using a particular “formula” in trying to solve water jug problems when that method had been successful in solving earlier problems. Luchins work suggests a “momentum” oriented explanation of why subjects fail to adapt. If the Luchins explanation is adopted, the phenomenon being investigated is one related to issues such as reinforcement and behavioral modification. The proper response in our information system and our disclosure process will depend upon the difficulty in extinguishing the old behavior(s) and substituting new or modified behavior(s). Significantly, Knight ( 1960, of Ijiri et al.) published a paper that dealt explicitly with the issue of the relationship between the effort required to learn an algorithm to solve a set of Luchins water jug problems and its persistent use in the face of alternative easier and obvious solution techniques to the problems. What he found was that the continued use of the algorithm was directly related to the diI3culty in initially learning it and that it was used even in lieu of an alternative solution that required no etfort at all. Thus it would appear that the nature and strength of the “bells and whistles” used in any situation must be a function of the strength of the set which we wish to overcome. Such an analysis would explain why so many subjects in ftnancial accounting based choice tasks fail to respond to the inclusion of, for example, simple

BIRNBERG

lifo or fife labels. The momentum from previous experience with such tasks coupled with their ability to reach a conclusion (though not necessarily a correct one), results in ever increasing momentum with each passing trial to repeat their past problem solving behaviors. Adbelkhalik & Keller’s subjects may have been behaving in the same manner as Luchins’ and Knight’s If this were true, one might conjecture that their momentum built, and they were not interested in or aware of the need to revise their algorithm. Given the diversity of possible causes of a set. no single approach to overcoming the set is evident. For example, more training in advance of undertaking the project will overcome a lack of understanding, but may build other rigidities into their behavior if Knight’s findings persist with accounting subjects. The proceeding analysis leads us to conclude that the important question is how to better ascertian the apparent causes of what has been labeled furated behavior. While we recognize that a reader may dismiss some of our concerns regarding the prior studies, we do feel, however, that, on balance, we have raised enough valid issues concerning the ability of an input-output methodology to conclude that subjects are or are not fixated. In the next section we discuss an alternative methodology.

SOME METHODOLOGICAL PROPOSALS It would appear that what is needed at this time is research that is more exploratory in nature and less concerned with doing the definitive experiment. The lesson to be learned from the research done thus far may be that we need to go back to base one. To this end it would appear that the use of a laboratory study with non-professional subjects may not be appropriate. Field experiments such as the Abdel-khalik & Keller ( 1979) study which used professionals as subjects have also raised other issues. Do the subjects care? Is the task rich enough to be considered realistic and evoke “on-the-job” behaviors? Perhaps we should even worry about the possibility that on-the-job behaviors do not

METHODOLOGICAL PROBLEMS IN FIINCTWNAL FIXATION RESEARCH

include lifc+fifo adjustments since other factors may dominate the adjustment or more accessible data may be highly correlated with the lifoflfo effect in real world data sets. An alternative approach would appear to be more promising at present. If we are willing to admit that the experimenters’ observation of decision by subjects is a surrogate for observing of the process by which that decision is made, then a reasonable methodology mr.y be available. Some form of protocol collection by researchers through the subject’s thinking aloud while solving the problem may be the answer. This approach would permit the researcher to answer questions such as: 1. Did the subject note the change? 2. Did the subject give any indication of appreciating its relevance? 3. Was the change understood? 4. Was the change ignored on grounds of its materiality. etc,? The researcher, by examining protocol, will be able to achieve better insights into the answers to the issues raised earlier. What is given up through the subjectivity of the process is compensated for to a significant degree by the clear cut nature of the issues the researcher is pursuing. Unlike many uses of protocols for model building (see Bouwman, 1984; Shields, 1984 ) where more subtle issues were being pursued, the researcher in this case is interested in the presence or absence of a few critical items in the protocol. Such data may be less controversial To the extent that Fig. 1 validly represents how a (non) fixated subject would act, the protocols could be interpreted with more clarity than if no preconception existed. It is easy to imagine a protocol that would disprove the fixation hypothesis in the case where the researcher is interested in the effects ofalter-

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native accounting policies. Such a protocol would indicate that the subject noted the difference (say, lifo-ffio), but did not feel that it would alter the decision. Such a result in the input-output studies would be labeled furation. If this response was incorrect according to some known criterion, we may wish to suggest the development of decision aids as in the “bootstrapping” literature or predecision trainmg. However, the remedy lies outside the province of fixation research which might suggest better bells and whistles to overcome furated behavior. Additionally, protocol analysis may permit the efficient use of a small number of expert subjects using a realistic task. The experimenter is able to make better use of the small subject pool by using the richer task, being able to debrief the subjects and move programmatically through the issues. Finally, the use of protocols may permit researchers to avail themselves of “natural experiments” by observing loan officers, analysts etc., as they perform analysis on the job. While such studies may require a high degree of cooperation from the subject, the output will provide more definitive insights.

CONCLUSIONS The authors recognize that this research paints a rather bleak picture. The experimental problems are quite real and the problems in making extrapolations are immense. Yet we remain optimistic that future research on fixation is necessary and possible. We would only hope that future researchers choose their methodologies, such that their results are clear cut and interpretable.

BIBLIOGRAPHY Abdel-khalik. A. R. Bi Keller. T. F.. Earnings of Cash Flows: An Experiment on Functional Fixation and the \‘aluation of the Firm. Strcdies in Accounfitzg Research Vol. 16 (The Atncrican Accounting Association. 10-9 ).

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NEIL WILNER andJACOB

BIRNBERG

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