The Influence of Cognitive Ability on Cognitive Biases Generated by the Representativeness Heuristic

Lucena, Edzana R. F. da C. Vieira; Silva, César Augusto Tibúrcio; Azevedo, Yuri Gomes Paiva

doi:10.7819/rbgn.v23i1.4090

Edzana R. F. da C. Vieira Lucena

. Federal University of Rio Grande do Norte, Department of Accounting, Natal, Brazil.

https://orcid.org/0000-0003-4563-2602

César Augusto Tibúrcio Silva

. University of Brasilia, Faculty of Economics, Business Administration and Accounting, Brasilia, Brazil.

https://orcid.org/0000-0002-5717-9502

Yuri Gomes Paiva Azevedo

. University of São Paulo, School of Economics, Business Administration and Accounting, Ribeirão Preto, Brazil.

https://orcid.org/0000-0002-0830-0214

Responsible Editor:

Prof. Dr. Joelson Sampaio

Reviewers:

Elionor Farah; César Carvalho Junior; One of the reviewers decided not to disclose his/her identity.

Conflicts of interest:

The authors have no conflict of interest to declare

1
. Edzana Roberta Ferreira da Cunha Vieira Lucena, Ph.D. in Accounting from the University of Brasilia, Brasilia, Brazil. E-mail: edzana@hotmail.com

2
. César Augusto Tibúrcio Silva, Ph.D. in Controllership and Accounting from the University of Sao Paulo, Sao Paulo, Brazil. E-mail: cesartiburcio@unb.br

3
. Yuri Gomes Paiva Azevedo, Ph.D. Candidate in Controllership and Accounting at the University of Sao Paulo, Sao Paulo, Brazil. E-mail: yuri_azevedo@live.com

1
. Edzana Roberta Ferreira da Cunha Vieira Lucena: Definition of research problem, Development of hypotheses or research questions (empirical studies), Theoretical foundation/literature review, Definition of methodological procedures, Data collection, Statistical analysis, Analysis and interpretation of data, Critical revision of the manuscript, Manuscript writing.

2
. César Augusto Tibúrcio Silva: Definition of research problem, Development of hypotheses or research questions (empirical studies), Definition of methodological procedures, Critical revision of the manuscript, Manuscript writing.

3
. Yuri Gomes Paiva Azevedo: Statistical analysis, Analysis and interpretation of data, Manuscript writing.

Part	Description
I	Identifying the profile of the respondents	Gender, age, level of education, professional experience, time in profession, and region of residence
II	Measuring the cognitive ability of the studied subjects (Score obtained in the CRT)	▪ A bat and a ball together cost US$110. The bat costs US$100 more than the ball. How much is the ball? (Impulsive Response: US$10; correct answer: US$5).
		▪ 5 minutes are needed for 5 machines to make 5 shirts. How long would 100 machines take to make 100 shirts? (Impulsive Response: 100 min.; correct answer: 5 min.).
		▪ In a lake, there is a water lily. Every day, it doubles in size. If it takes 100 days for the water lily to cover the entire lake, how long would it take for it to cover half of that lake? (Impulsive Response: 50 days; correct answer: 99 days).
III	Identifying the influence of cognitive bias generated by representativeness heuristic in decision making	30 problems, five for each bias generated by the representativeness heuristic

	Base rate insensitivity	Insensitivity to sample size	Misconceptions of chance	Regression fallacy	Illusion of validity	Insensitivity to predictability
Bartlett sphericity test	1470.966***	760.960***	1057.990***	489.210***	2726.999***	426.258***
Cronbach’s alpha	0.762	0.762	0.661	0.807	0.676	0.889
IC 95% for Cronbach’s alpha	0.738 to 0.784	0.738 to 0.784	0.627 to 0.693	0.786 to 0.826	0.640 to 0.708	0.878 to 0.899
Cronbach’s alpha for excluded item	0.639 to 0.784	0.639 to 0.784	0.560 to 0.612	0.701 to 0.768	0.564 to 0.603	0.642 to 0.691
KMO test	0.712	0.712	0.609	0.708	0.664	0.792
MSA	0.677 to 0.763	0.677 to 0.763	0.596 to 0.619	0.678 to 0.743	0.653 to 0.679	0.732 to 0.883
Communalities	0.586 to 0.810	0.586 to 0.810	0.742 to 0.778	0.690 to 0.760	0.586 to 0.625	0.587 to 0.830
Explained variance (%)	52%	52%	50%	72%	72%	75%

Questions		Intuitive	Reflexive	Others	Total
Question 1 - CRT	N	562	450	52	1,064
Question 1 - CRT	%	52.8	42.3	4.9	100
Question 2 - CRT	N	485	376	203	1,064
Question 2 - CRT	%	45.6	35.3	19.1	100
Question 3 - CRT	N	498	444	122	1,064
Question 3 - CRT	%	46.8	41.7	11.5	100

		Mean	Std. dev.	ANOVA	Welch and Brown-Forsythe
Base rate insensitivity	CRT = 0	6.63	1.83	-
	CRT = 1 and 2	6.25	2.22		<0.001
	CRT = 3	5.15	2.58		<0.001
	Total	6.18	2.22
Insensitivity to predictability	CRT = 0	6.80	1.90	0.390	-
	CRT = 1 and 2	6.91	1.88
	CRT = 3	7.01	1.78
	Total	6.89	1.87
Insensitivity to sample size	CRT = 0	6.43	2.05	-
	CRT = 1 and 2	6.35	2.40		0.777
	CRT = 3	6.49	2.56		0.764
	Total	6.40	2.31
Illusion of validity	CRT = 0	3.23	3.33	0.006	-
	CRT = 1 and 2	3.31	3.36
	CRT = 3	2.46	3.30
	Total	3.11	3.35
Misconception of chance	CRT = 0	5.62	3.06	0.686	-
	CRT = 1 and 2	5.49	3.17
	CRT = 3	5.41	3.15
	Total	5.52	3.12
Regression fallacy	CRT = 0	5.43	1.99	0.704	-
	CRT = 1 and 2	5.48	2.16
	CRT = 3	5.59	2.30
	Total	5.48	2.13

Bias	CRT	N	1	2
Insensitivity to base rate	CRT = 3	207	5.15
	CRT = 1 and 2	452		6.25
	CRT = 0	405		6.63
	CRT = 3	207	2.46
Illusion of validity	CRT = 0	405		3.23
Illusion of validity	CRT = 1 e 2	452		3.31

Variable	CRT	Mean	SD	ANOVA
Comparison of the degree of difficulty in the CRT	CRT = 3	4.41	2.75
	CRT = 1 and 2	5.29	2.61	< 0.001
	CRT = 0	4.70	2.71
Opinion about judgment and decision making	CRT = 3	5.24	2.65
	CRT = 1 and 2	4.52	2.62	< 0.001
	CRT = 0	4.13	2.55

Variable	CRT	N	1	2
Comparison of the degree of difficulty on the CRT	CRT = 0	405	4.41
	CRT = 3	207	4.70
	CRT = 1 and 2	452		5.29
Opinion on judgment and decision making	CRT = 3	207	4.13
	CRT = 1 and 2	405	4.52
	CRT = 0	452		5.24

		Mean	ANOVA	Welch and Brown-Forsythe
Base rate insensitivity	Technical level	7.85	-
	Completed Graduation	6.40
	Incomplete Graduation	6.38		<0.001/
	Specialization	5.99		<0.001
	Master’s Degree	5.19
	Ph.D. Degree	4.66
Insensitivity to predictability	Technical level	7.40	0.377	-
	Completed Graduation	6.95
	Incomplete Graduation	6.95
	Specialization	6.61
	Master’s Degree	6.75
	Ph.D. Degree	7.03
Insensitivity to sample size	Technical level	4.28	0.043	-
	Completed Graduation	6.47
	Incomplete Graduation	6.43
	Specialization	6.19
	Master’s Degree	6.20
	Ph.D. Degree	7.38
Illusion of Validity	Technical level	5.90	0.170	-
	Completed Graduation	3.50
	Incomplete Graduation	3.01
	Specialization	2.88
	Master’s Degree	3.16
	Ph.D. Degree	2.63
Misconception of chance	Technical level	3.90	0.767	-
	Completed Graduation	5.48
	Incomplete Graduation	5.60
	Specialization	5.56
	Master’s Degree	5.23
	Ph.D. Degree	5.27
Regression fallacy	Technical level	6.78	0.277	-
	Completed Graduation	5.43
	Incomplete Graduation	5.45
	Specialization	5.45
	Master’s Degree	5.92
	Ph.D. Degree	5.20

Bias	Level of education	N	1	2
Base rate insensitivity	Technical level	4		7.85
	Completed Graduation	237	6.40	6.40
	Incomplete Graduation	546	6.38	6.38
	Specialization	151	5.99	5.99
	Master’s Degree	94	5.19
	Ph.D. Degree	32	4.66
Insensitivity to sample size	Technical level	4	4.28
	Completed Graduation	237		6.47
	Incomplete Graduation	546		6.43
	Specialization	151	6.19	6.19
	Master’s Degree	94	6.20	6.20
	Ph.D. Degree	32		7.38

Biases	Mean		Student’s T-test
Biases	Female (N = 503)	Male (N = 561)	P-value
Base rate insensitivity	6.39	5.99	0,003
Insensitivity to predictability	6.90	6.88	0,825
Insensitivity to sample size	6.24	6.55	0,031
Illusion of validity	2.88	3.33	0,028
Misconception of chance	5.72	5.34	0,049
Regression fallacy	5.33	5.61	0,032

		N	Mean	ANOVA
Base rate insensitivity	Midwest	50	5.27	< 0.0001
	Northeast	745	6.43
	North	13	6.75
	Southeast	176	5.80
	South	80	5.14
Insensitivity to predictability	Midwest	50	6.55	0.218
	Northeast	745	6.96
	North	13	7.35
	Southeast	176	6.79
	South	80	6.61
Insensitivity to sample size	Midwest	50	6.24	0.472
	Northeast	745	6.49
	North	13	5.97
	Southeast	176	6.21
	South	80	6.22
Illusion of validity	Midwest	50	2.31	0.006
	Northeast	745	3.33
	North	13	3.55
	Southeast	176	2.82
	South	80	2.15
Misconception of chance	Midwest	50	5.24	0.349
	Northeast	745	5.61
	North	13	6.21
	Southeast	176	5.46
	South	80	4.94
Regression fallacy	Midwest	50	5.91	0.257
	Northeast	745	5.42
	North	13	6.18
	Southeast	176	5.45
	South	80	5.74

Bias	Region	N	1	2	3
Insensitivity to base rate	South	80	5.14
	Midwest	50	5.27	5.27
	Southeast	176	5.80	5.80	5.80
	Northeast	745		6.43	6.43
	North	13			6.75

	Dependent variable
	Base rate insensitivity	Insensitivity to sample size	Misconceptions of chance	Regression fallacy	Illusion of validity	Insensitivity to predictability
CRT Score	-0.424***	0.063	-0.160***	-0.603***	-0.551***	-0.067
CRT Score	(0.062)	(0.046)	(0.049)	(0.054)	(0.073)	(0.051)
Gender	-0.152	-0.061	-0.066	-0.022	-0.028	0.203*
Gender	(0.133)	(0.107)	(0.114)	(0.124)	(0.157)	(0.117)
Age	0.014*	0.011	0.016**	0.012	0.046***	0.010
Age	(0.008)	(0.007)	(0.007)	(0.008)	(0.011)	(0.008)
Technical Level	-1.592	-0.031	-1.326	0.004	-2.096**	0.613
Technical Level	(1.103)	(0.859)	(0.916)	(1.030)	(0.961)	(0.938)
Completed Graduation	0.048	-0.130	-0.084	0.030	-0.292	-0.134
Completed Graduation	(0.163)	(0.136)	(0.145)	(0.149)	(0.194)	(0.149)
Specialization	-0.409*	-0.470***	-0.520***	-0.148	-0.536**	-0.180
Specialization	(0.209)	(0.175)	(0.186)	(0.204)	(0.266)	(0.191)
Master’s Degree	-1.201***	-0.366*	-0.579***	-0.711***	-0.663**	0.302
Master’s Degree	(0.288)	(0.209)	(0.223)	(0.222)	(0.314)	(0.228)
Ph.D. Degree	-1.561***	-0.509	-0.481	-1.475***	-1.132*	-0.437
Ph.D. Degree	(0.475)	(0.337)	(0.359)	(0.401)	(0.612)	(0.368)
Constant	6.688***	6.727***	5.788***	6.299***	5.111	4.838***
Constant	(0.281)	(0.231)	(0.246)	(0.265)	(0.336)	(0.252)
Shapiro-Wilk test	0.000	0.000	0.000	0.000	0.000	0.000
White test	0.000	0.273	0.129	0.000	0.000	0.122
Ramsey RESET	0.031	0.825	0.368	0.786	0.011	0.060
Mean VIF	1.25	1.25	1.25	1.25	1.25	1.25

		1	2	3	4	5	6	7	8	9	10	11	12	13	14
1	CRT score	1
2	Base rate insensitivity	-0.200	1
3	Insensitivity to sample size	0.029	0.337	1
4	Misconceptions of chance	-0.100	0.344	0.346	1
5	Regression fallacy	-0.328	0.646	0.288	0.220	1
6	Illusion of validity	-0.207	0.313	0.243	0.324	0.251	1
7	Insensitivity to predictability	-0.015	0.214	0.173	0.231	0.141	0.244	1
8	Gender	0.214	-0.090	-0.009	-0.043	-0.082	-0.032	0.061	1
9	Age	0.061	-0.087	-0.036	-0.016	-0.057	0.053	0.028	0.151	1
10	Technical level	0.011	0.038	-0.003	-0.027	-0.001	-0.043	0.020	0.027	0.030	1
11	Completed graduation	0.008	0.072	0.002	0.020	0.036	-0.003	-0.017	-0.015	0.161	-0.032	1
12	Specialization	0.046	-0.051	-0.047	-0.061	-0.003	-0.009	-0.023	0.039	0.326	-0.024	-0.218	1
13	Master’s degree	0.053	-0.114	-0.035	-0.057	-0.093	-0.014	0.076	0.058	0.294	-0.018	-0.168	-0.124	1
14	Ph.D. degree	0.090	-0.102	0.003	-0.016	-0.122	-0.025	-0.006	0.056	0.252	-0.010	-0.097	-0.072	-0.055	1

[1] Responsible Editor:

Prof. Dr. Joelson Sampaio

Brasil

Brasil

The Influence of Cognitive Ability on Cognitive Biases Generated by the Representativeness Heuristic

Abstract

Purpose:

Design/methodology/approach:

Findings:

Originality/value: