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June 2012 » Cognitive Biases in Audit Engagements
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Michael C. Knapp, PhD, CPA, CMA, and Carol A. Knapp, PhD, CPA
In 1972, psychologist Daniel Kahneman, who was awarded the Nobel Prize in Economics 30 years later, and his associate, Amos Tversky, coined the term “cognitive bias,” which refers to the tendency of individuals to make systematic judgment errors when making decisions. These errors typically result from information processing shortcuts or heuristic behaviors that are “hardwired” or embedded into human decision-making processes.
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