METHODOLOGY 1. Research Design Alfian
To summarize, the hypothesis relating sponsorship bias to the current study proposes that the effect of cognitive style, which generates include decisions, will be
confounded by sponsorship bias. H2a: Interaction between project sponsorship bias and managers’ cognitive style
affecting their treatment of opportunity costs. H2b: Interaction between project sponsorship bias and managers’ cognitive style
affecting managers with intuitionthinking IT cognitive style will tend to include opportunity costs information rather than managers with sensationthinking ST
cognitive style in resources allocation decisions.
3. METHODOLOGY 3.1. Research Design
A laboratory experiment with 2x4 factorial designs with Friedman Neumann’s 1980 multiple time-series research design was employed to investigating the effect of
cognitive style on the managers’ decision of opportunity costs in conditions with and without sponsorship bias. Myers-Briggs Type Indicator MBTI used for determining
subjects’ cognitive style. Cases and scenario was written that asked each subject to make a series of twelve
sets of decisions between two products having unequal margins. At the outset of the experiment, each subject was asked to assume the role of a middle-level manager who
must recommend one of two mutually exclusive products. The subjects were told they would be given some data and that it was economically feasible to request up to two
items of additional information, but that any information in excess of two items was prohibitively expensive. This scenario was followed by a set of instructions.
After receiving the instructions, subjects were presented information about the revenues and variable costs associated with each of two products and asked to choose
between the two products choice 1. Once the choice was made, subjects were given some additional information which included information about the opportunity costs
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associated with one of the projects. The magnitude of these amounts was not disclosed. The subjects were then asked to make the choice again choice 2. The subjects were then
told that farther information could be obtained in two of five information categories. The five categories included one outlay cost item, one opportunity cost item, and three items
of fixed costs allocated, joint costs, or the current interest rate. Since three of the items were irrelevant, an informed decision maker would be expected to request the outlay and
opportunity cost information. At this point, the subject could choose zero, one, or two items of additional information. There was no incentive, however, for choosing less than
two items. The two relevant items of additional information included opportunity costs.
While it is unlikely that decision makers would ignore relevant information, our research design included a control that permitted us to evaluate whether subjects ignored relevant
information or not. As a test of how subjects used relevant information, the first choice of each decision set checked that subjects were margin maximizers, this test is
manipulation check step 1. Subjects were not informed that this study concerned use of opportunity costs. As
soon as the subject requested the additional information, it was presented in tabular form and once again a decision was requested. After the third decision, the entire process was
repeated. Every subject completed twelve different sets of three choices each. The questionnaire was extensively pre-tested using pilot test with Master of
Science students in Accounting. The pre-testing process resulted in substantial revision of the program and decision choices. Also, the pretesting process revealed that in most cases
learning i.e., familiarization, maturation, and experimentation took three decision sets. Based on these results, researcher decided to consider the first three decision sets part of
the learning process and exclude them from the formal analysis.
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Of the nine remaining decision sets, six were experimental and three were control choices. In the control choices, the correct choice was not sensitive to the additional
information. They were used for three purposes. First, since in the six experimental choices, the subjects were expected to change their decisions based on the additional
information, the control choices guarded against subjects who might attempt to learn the experimental strategy and replicate some obvious pattern of responses. Second, one
control choice had only one item of relevant information. Thus, subjects could not always assume two items of information were appropriate. Third, the control choices enabled us
to determine which subjects were not taking the task seriously, were responding randomly, or were ignoring some outlay cost information. Any subject who answered
incorrectly on more than one of the control choices was considered to belong to one of these categories and was therefore excluded from the analysis.
In each of the experimental cases, a correct decision required a switch in choice of project between the initial decision and the final one. The twelve sets of three decisions
can be categorized into four groups: Learning Choices
: 3 sets Case 1 Control Choices
: 3 sets Case 2 Experimental Choices : 6 sets Case 3 4
Consequently, this study starts with no opportunity cost information disclosed choice 1, then presents some non-quantitative opportunity cost information for one project in the
pair choice 2, and concludes with disclosure of the monetary amounts of opportunity costs associated with each project choice 3.