Performance Evaluation Judgments: Effects of Prior Experience Under Different Performance Evaluation Schemes and Feedback Frequencies

Posted: 23 Sep 1999

See all articles by James R. Frederickson

James R. Frederickson

Melbourne Business School

Sean A. Peffer

University of Kentucky - Gatton College of Business and Economics

Jamie H. Pratt

Indiana University - Kelley School of Business - Department of Accounting

Abstract

This paper documents that previous experience under a performance evaluation system can systematically bias decision makers' subsequent evaluations. In the experiment reported in this paper, subjects made a series of investment decisions under one of four accounting systems, created by crossing evaluation scheme (outcome-based versus decision-based) with outcome feedback frequency (frequent versus infrequent), and then evaluated the performance of other decision makers who had made similar decisions. Consistent with prior research (e.g., Brown and Solomon [1987; 1993], Fisher and Selling [1993], Kennedy [1995], Lipe [1993], and Tan and Lipe [1997]), the evaluations were affected by knowledge of outcomes (i.e., outcome effect). More importantly, the size of this outcome effect varied across the four accounting systems, consistent with an interaction between evaluation scheme and outcome feedback frequency. As expected, experience under the outcome-based evaluation scheme caused a larger outcome effect than experience under the decision-based scheme, and frequent outcome feedback increased the difference between the two schemes.

JEL Classification: M40, M46, C91

Suggested Citation

Frederickson, James R. and Peffer, Sean and Pratt, James H., Performance Evaluation Judgments: Effects of Prior Experience Under Different Performance Evaluation Schemes and Feedback Frequencies. Available at SSRN: https://ssrn.com/abstract=180908

James R. Frederickson

Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053
Australia

Sean Peffer

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States
606-257-3149 (Phone)
606-257-3654 (Fax)

James H. Pratt (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2657 (Phone)
812-855-8679 (Fax)

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