22 January, 2021, Bengaluru: Dr Kathy Rupar-Wang, Assistant Professor, Georgia Institute of Technology, was the speaker for the fourth webinar organized by IIM Bangalore’s Behavioural Sciences Lab on January 15 (Friday), 2021, at 6:30 pm. Her research focuses on judgment and decision-making in financial accounting contexts. Her work has been published in The Accounting Review, Contemporary Accounting Research, and Journal of Behavioral Finance.
The topic of this webinar was ‘Improving Investors' Decisions: Psychology Theory to the Rescue!’ based on Dr Rupar-Wang’s own research. Dr Rupar-Wang started with the description of behavioural accounting (psychology and accounting) and experimental accounting research. There were three major areas of focus in the talk based on her research: how to catch deception or lying behaviour; ratio bias, and investomers.
Recent research suggests that relying on unconscious thought may help in detection of lying more than conscious thought, as the former may be better for complex problems that require a vast amount of information to be considered at once. Dr Rupar-Wang described her own experiments with conscious and unconscious thought (with distraction tasks using word sorting/word search task) to detect lying. The rate of deception detection with conscious thought was 39% and it increased to 70% with unconscious thought. The takeaway point from this research was that taking time away from a difficult question (to give unconscious mind to think)’ could lead to better detection of deception.
Ratio bias or perceiving ratios presented in smaller terms to be lesser than the equivalent ratios presented in larger numbers was also discussed. Dr Rupar-Wang’s experimental research has demonstrated that scepticism may reduce this bias but is not sufficient by itself because of everyday distractions. Investors can rely on simple tools like excel to transform the information into their desired format (percentages or actual numbers).
Dr Rupar-Wang’s latest research on ‘investomers’ (investor-customer) showed that the investomers perceive company information more positively and trusted the company information more as they sold fewer shares in response to a negative company event compared to investors-only. This may be beneficial for the companies but has negative consequences for the ‘investomers’, who should instead consider diversifying or using trusted advisors.
22 January, 2021, Bengaluru: Dr Kathy Rupar-Wang, Assistant Professor, Georgia Institute of Technology, was the speaker for the fourth webinar organized by IIM Bangalore’s Behavioural Sciences Lab on January 15 (Friday), 2021, at 6:30 pm. Her research focuses on judgment and decision-making in financial accounting contexts. Her work has been published in The Accounting Review, Contemporary Accounting Research, and Journal of Behavioral Finance.
The topic of this webinar was ‘Improving Investors' Decisions: Psychology Theory to the Rescue!’ based on Dr Rupar-Wang’s own research. Dr Rupar-Wang started with the description of behavioural accounting (psychology and accounting) and experimental accounting research. There were three major areas of focus in the talk based on her research: how to catch deception or lying behaviour; ratio bias, and investomers.
Recent research suggests that relying on unconscious thought may help in detection of lying more than conscious thought, as the former may be better for complex problems that require a vast amount of information to be considered at once. Dr Rupar-Wang described her own experiments with conscious and unconscious thought (with distraction tasks using word sorting/word search task) to detect lying. The rate of deception detection with conscious thought was 39% and it increased to 70% with unconscious thought. The takeaway point from this research was that taking time away from a difficult question (to give unconscious mind to think)’ could lead to better detection of deception.
Ratio bias or perceiving ratios presented in smaller terms to be lesser than the equivalent ratios presented in larger numbers was also discussed. Dr Rupar-Wang’s experimental research has demonstrated that scepticism may reduce this bias but is not sufficient by itself because of everyday distractions. Investors can rely on simple tools like excel to transform the information into their desired format (percentages or actual numbers).
Dr Rupar-Wang’s latest research on ‘investomers’ (investor-customer) showed that the investomers perceive company information more positively and trusted the company information more as they sold fewer shares in response to a negative company event compared to investors-only. This may be beneficial for the companies but has negative consequences for the ‘investomers’, who should instead consider diversifying or using trusted advisors.