Wednesday, May 6, 2020
When Do Opportunity Costs Count - 1014 Words
In the study ââ¬Å"When do opportunity costs count? The impact of vagueness, project completion stage, and management accounting experienceâ⬠, Victoravich asks the research question ââ¬Å"how two situational factors, vagueness of opportunity cost presentation and stage of project completion, affect individualsââ¬â¢ tendency to attend to opportunity costsâ⬠? (2010) Opportunity cost is a ââ¬Å"fundamental component of classical economic theoryâ⬠, and defined as ââ¬Å"the value of the next-highest-valued alternative use of that resource ââ¬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 ,â⬠¦show more contentâ⬠¦For the purposes of the study, Victoravich defines vagueness as a ââ¬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 optionsâ⬠(2010). In the way in which Victoravich presents prior research findings and constructs, there seems to a clear gray area. Victoravichââ¬â¢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. Victoravichââ¬â¢s study incorporates prior findings and seeks to the supplement the shortcomings of the prior research studies, such as: Shortcomings of Previous Research: â⬠¢ Prior research has typically presented opportunity costs in a precise manner, which is inconsistent with how they would appear in a realistic setting. â⬠¢ Prior research has not investigated whether opportunity cost vagueness reduces decision-makersââ¬â¢ tendency to attend to this relevant information. â⬠¢ 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 ââ¬Å"When do opportunity costs count? The impact of vagueness, project completion stage, and management accounting experienceâ⬠, the conceptual constructs examined in are 1) Management Accounting Experience, 2)
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