Functional fixation revisited: the effects of feedback and a repeated measures design on information processing changes in response to an accounting change
V. Arunachalam et G. Beck, Functional fixation revisited: the effects of feedback and a repeated measures design on information processing changes in response to an accounting change, ACC ORG SOC, 27(1-2), 2002, pp. 1-25
This study uses a product pricing laboratory experiment to evaluate the pre
sence of functional fixation and extends prior research, particularly the w
ork of Bloom et al. (1984) and Murray (1991) [Bloom, R., Elgers, P. T., & M
urray, D. (1984). Functional fixation in product pricing: A comparison of i
ndividuals and groups. Accounting, Organizations and Society, 9(1), 1-11; M
urray, D. (1991). Data fixation: Methodological refinements and additional
empirical evidence. Behavioral Research in Accounting, 3, 25-38] by incorpo
rating a repeated measures design and a feedback variable. Functional fixat
ion was assessed by the degree of information processing changes in respons
e to an accounting change. The accounting change, in the form of a change i
n depreciation method (straight line to accelerated or accelerated to strai
ght line, respectively), was varied by the period in which the change occur
red and by whether judgment policy feedback was provided. Ten experimental
conditions were utilized in the study: two control conditions with no accou
nting change, four second-period accounting change conditions (two with fee
dback and two without), and four third-period accounting change conditions
(two with feedback and two without). A total of 190 subjects participated i
n the study and made product pricing decisions for three sets of thirty pro
ducts each, each constituting a separate period. In four of the 10 conditio
ns, subjects received feedback during the second and third period in the fo
rm of cue weights and estimated prices based on the preceding task. Overall
, results indicate that functional fixation is present, and that the period
of the accounting change and feedback do not significantly influence it. H
owever, feedback was differentially effective depending on the period in wh
ich the accounting change occurred, such that although it did not reduce fi
xation, it resulted in pricing differences obtaining from a revised conside
ration of the variables underlying the pricing decision model. The results
of a second experiment with a larger number of periods were basically simil
ar in demonstrating fixation effects. The results are discussed in terms of
their implications for functional fixation as well as directions for futur
e research. (C) 2001 Elsevier Science Ltd. All rights reserved.