The effects of context on the selection of decision strategies for the cost variance investigation problem

Abstract

An important theme in research on behavioral decision making is that decision behavior is largely contingent on characteristics of the task and context. One variation on this theme is the appearance of contingency models that explain variation in decision behavior in terms of the effects that changes in task and context have on the relative net benefit of each available decision strategy. The L. R. Beach and T. R. Mitchell (1978, Academy of Management Review, July, 439–449) model is an example of such a model. In the present study, the Beach and Mitchell (1978) model is used as a framework for generating hypotheses about the effects of two contextual variables—state uncertainty and significance of the decision—on the selection of decision strategies for the management problem of whether to investigate the cause of a cost variance. The hypotheses are supported by an experimental test.