Abstract
- This study examines the effects on decision making of reporting the uncertainty associated with managerial accounting information. Specifically, it describes scenarios in which reporting the uncertainty inherent in managerial accounting data can negatively impact decisions. My predictions that providing uncertainty reporting will induce certain dysfunctional prospect theory behaviors are generally supported. Decision makers provided with uncertainty reporting more often forgo gain-probable opportunities and more often pursue loss-probable opportunities, as compared to decision makers not provided with uncertainty reporting. And this results generally in reduced performance. These effects of uncertainty reporting do not seem to change much with repeated decision iterations. These results have practical implications, as organizations might consider when to include (or not include) uncertainty reporting, and also contributes to a growing literature on addressing uncertainty in accounting.