ENHANCING JUDGMENT AND DECISIONMAKING SKILLS: THE SUBSTITUTION EFFECT OF
INDUCTIVE REASONING ABILITY
OKJDM, MAY 4, 2013
Dr. Wray E. Bradley
The University of Tulsa
© 2013 All Rights Reserved
[email protected]
W. E. Bradley, University of Tulsa, 2013
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THE RESEARCH DIRECTION
Can academic training in inductive reasoning improve
the Judgment and Decision-making skills of young
professionals and advanced students, when they are
faced with Ill-Structured problems?
W. E. Bradley, University of Tulsa, 2013
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WHY IS THIS IMPORTANT?
• Employers are increasingly interested in finding young employees
who exhibit good problem solving, sound judgment, and decisionmaking skills.
• Professionals, in all professions, are often faced with ill-structured
problems that require them to exercise their judgment and
decision-making abilities and skills.
• An ill-structured problem has no concrete solution, the decision-
making for these types of problems is based on a reasoned
opinion, a judgment. Often, academic and professional training
programs offer little opportunity to teach students these specific
skills. Future academic and professional education needs to focus
more on developing these abilities and skills.
W. E. Bradley, University of Tulsa, 2013
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SOME COMMENTS FROM RESEARCHERS
• “Although the psychology of reasoning has
overwhelmingly concentrated on deductive reasoning,
most problems we deal with in our everyday lives are
inductive. …few problems of consequence in our lives
have deductive or even any meaningful kind of
“correct” solution.” (Sternberg 2011).
• “Thus, inductive reasoning facilitates problem solving,
learning, and the development of expertise.” (Haverty,
et al. 2000).
W. E. Bradley, University of Tulsa, 2013
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DEDUCTIVE REASONING EXAMPLES
• Deductive reasoning: the ‘correct’ conclusion is based
on general principles
– Mathematical proofs
– Physics problems:
• If I=V/R and the resistance is doubled, the current will be _________
– Botany:
• Monocot flowers have petals that come in groups of three
• Apple flowers have five petals
• So, apples trees are ____________________
W. E. Bradley, University of Tulsa, 2013
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INDUCTIVE REASONING EXAMPLES
• Inductive reasoning: uses specific cases to make an
inference that has general application. There is no
empirically correct answer, it is a reasoned judgment.
Will this stock perform better than that one?
What is the value of this business if it was to be sold today?
Is an employee of this company committing fraud?
If I marry my boyfriend (girlfriend) will we stay together for life?
Is this job the best for my future, or is the other job the best?
If I continue to cut class, what is the likelihood that I will get an
‘A’?
– Will these instructions cause a conflict with other aircraft or
controllers?
–
–
–
–
–
–
W. E. Bradley, University of Tulsa, 2013
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INDUCTIVE REASONING ABILITY - BASICS
• Inductive reasoning ability is a separate measureable
cognitive ability (Stanovich 2004, Sternberg 2004).
• It can be enhanced by training (Barkl et al. 2012 , Phye and
Johnson 2009, Klauer and Phye 2008).
• Training in inductive reasoning can result in positive transfer of
problem-solving skills in an academic setting (Klauer and
Phye 2008).
• Training in inductive reasoning improves fluid intelligence but
has no impact on crystallized intelligence (Klauer, et al. 2002)
• In some cases, inductive reasoning ability can enhance
performance of inexperienced professionals because it can
act as a substitute for experience (Bradley 2009)
W. E. Bradley, University of Tulsa, 2013
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COGNITIVE PROCESSES INVOLVED IN INDUCTIVE
REASONING ABILITY
• Selective encoding:
– Data collection
– Cue recognition (which cues in the data are most relevant)
• Selective comparison:
– Retrieving declarative and procedural knowledge from memory
– Retrieving general problem-solving skills from memory
– Using the retrieved knowledge and skills for :
• Pattern recognition
• Hypothesis generation
• Hypothesis testing
W. E. Bradley, University of Tulsa, 2013
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INVESTIGATING THE LINK BETWEEN INDUCTIVE
REASONING ABILITY AND PERFORMANCE OF
BUSINESS PROFESSIONALS
Ability and Performance on Ill-Structured Problems: The Substitution
Effect of Inductive Reasoning Ability
Behavioral Research in Accounting
Volume 21, Number 1, 2009
pp.19-35
(This article received the ABO-AAA best paper award for 2010)
W. E. Bradley, University of Tulsa, 2013
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QUOTE FROM THE FIRST PAGE OF THE ARTICLE
“I gratefully acknowledge the helpful comments (in
alphabetical order) of …. and participants of a number of
research workshops including those at Oklahoma State
University and those sponsored by the Oklahoma-Kansas
Judgment and Decision Making group…”
W. E. Bradley, University of Tulsa, 2013
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THE STUDY
• 130 experienced business valuators were given the task
of valuing a Medical Practice, based on case study
materials supplied. The task was rated realistic by
participants.
• Inductive reasoning ability of each participant was
measured by a commercially available psychometrically
reliable and valid instrument.
• The participant’s valuations of the Medical Practice
were compared to a consensus value of an expert
panel.
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THE GROUPS
• Participants were divided into two experience groups:
– Inexperienced (six years or less business valuation experience)
– Experienced (more than six years valuation experience)
• Participants were further divided into two inductive reasoning
ability groups based on inductive reasoning scores from the
California Critical Thinking Skills Test:
– Low Reasoning ability (88 percentile or lower)
– High Reasoning ability (greater than 88 percentile)
W. E. Bradley, University of Tulsa, 2013
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Table 3
Mean Comparison of Variables Related to Experience and Knowledge
Inexperienced
Mean
n = 61
Experienced
Mean
n = 69
t
Sig.
(one tail)
Number of years as a
business valuator
3.44
14.89
-12.198
.000*
The number of business
valuation certifications held.
Range = 0 to 4
1.82
2.16
-1.860
.033**
Number of previous medical
practice valuations.
4.80
12.28
-2.246
.013**
Number of total valuations of
any kind
41.90
209.81
-5.306
.000*
Variables
W. E. Bradley, University of Tulsa, 2013
ADAPTED FROM
BRADLEY 2009, PAGE 29
The inexperienced group
was composed of business
valuators with six or fewer
years of valuation
experience. This represents
practitioners with domain
knowledge and modest
experience.
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ASSUMPTIONS
• Experienced business valuators will use schemas and
scripts that have been developed after years of
experience. They will use very little of their inductive
reasoning ability when dealing with the experimental
case.
• Inexperienced business valuators will have domain
knowledge but limited procedural knowledge.
Therefore, they will have to use inductive reasoning
ability to form a reasoned judgment as to what the
valuation should be. They will need to use the cognitive
processes of selective encoding and selective
comparison. Inexperienced valuators with high
inductive reasoning ability should perform better.
W. E. Bradley, University of Tulsa, 2013
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HYPOTHESIS
• “For ill-structured problems, inexperienced professionals
with low inductive reasoning ability will exhibit
performance below experienced professionals and
below inexperienced professionals who have high
inductive reasoning ability.” (Bradley 2009, p. 24)
• High inductive reasoning ability is shown to partially
substitute for experience if the performance of
inexperienced participant’s with high inductive
reasoning ability is similar to experienced professionals.
W. E. Bradley, University of Tulsa, 2013
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RESULTS FROM
BRADLEY, 2009,
PAGE 30
The dependent
variable is the
absolute
difference
between the
expert panels
consensus value
and the valuations
of the
professionals. A
lower score
indicates better
performance
W. E. Bradley, University of Tulsa, 2013
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IMPLICATIONS
• Recall that, inductive reasoning ability can be increased
through training.
• Training of young professionals that will increase their
inductive reasoning ability will be beneficial, and can
act as a substitute for experience for some ill-structured
tasks.
• Training of graduate students and seniors with
declarative domain knowledge will be beneficial, and
act as a substitute for experience for some ill-structured
tasks. This will give them a head start in their professions.
• Training in inductive reasoning will benefit students and
professionals from all disciplines.
W. E. Bradley, University of Tulsa, 2013
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FUTURE BASIC RESEARCH
• We already know that increasing inductive reasoning ability
can positively influence fluid intelligence (Klauer, et al. 2002)
But
• What is the relationship between inductive reasoning ability
and learning style, memory, thinking style, need for
cognition?
• What is the relationship between inductive reasoning ability
and personality? Emotional intelligence (trait emotional selfefficacy)?
• What is the relationship between inductive reasoning ability
and economic and strategic choice?
W. E. Bradley, University of Tulsa, 2013
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FUTURE PROJECTS
• Develop classroom inductive reasoning training programs for
seniors and graduate students in the College of Business
(extend this to ethical reasoning versus teaching ethics)
• Develop online modules for training in inductive reasoning for
students and professionals
• Develop and conduct inductive reasoning training for
specific young professional groups:
–
–
–
–
–
–
Accountants
Fraud examiners
Financial planning specialists
Business valuators
Software designers
Other groups?
W. E. Bradley, University of Tulsa, 2013
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ANY MORE QUESTIONS OR SUGGESTIONS?
W. E. Bradley, University of Tulsa, 2013
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GO OKJDM !!
W. E. Bradley, University of Tulsa, 2013
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