When Do Opportunity Costs Count - 1014 Words

In the study â€Å"When do opportunity costs count? The impact of vagueness, project completion stage, and management accounting experience†, Victoravich asks the research question â€Å"how two situational factors, vagueness of opportunity cost presentation and stage of project completion, affect individuals’ tendency to attend to opportunity costs†? (2010) Opportunity cost is a â€Å"fundamental component of classical economic theory†, and defined as â€Å"the value of the next-highest-valued alternative use of that resource â€Å"(Victoravich, 2010; Henderson, 2015). Opportunity costs are also known as trade-offs. The motivation behind this study stems from the fact that prior studies investigating the impact of implicit versus explicit opportunity costs ,†¦show more content†¦For the purposes of the study, Victoravich defines vagueness as a â€Å"common pitfall of real world situations because decision-makers do not have access to exact inf ormation about the costs and benefits of all available options† (2010). In the way in which Victoravich presents prior research findings and constructs, there seems to a clear gray area. Victoravich’s presentation showcases the importance and need of additional research in order to conducted to elaborate, clarify, and expanding on the previous findings and judgements. Victoravich’s study incorporates prior findings and seeks to the supplement the shortcomings of the prior research studies, such as: Shortcomings of Previous Research: †¢ Prior research has typically presented opportunity costs in a precise manner, which is inconsistent with how they would appear in a realistic setting. †¢ Prior research has not investigated whether opportunity cost vagueness reduces decision-makers’ tendency to attend to this relevant information. †¢ Prior research has yet to investigate the cognitive process by which attention to opportunity costs influences judgment and decision-making and whether it has a decisional consequence. In the study â€Å"When do opportunity costs count? The impact of vagueness, project completion stage, and management accounting experience†, the conceptual constructs examined in are 1) Management Accounting Experience, 2)