Order Effect

Decision-making bias is caused by the use of individual heuristic strategies, is

simplification in the decision-making process. One of the biases that can occur as a result of the
gradual acquisition of information is the order effect, which the manager takes into consideration
is not based on the substance of the information, but tends to be influenced by the sequence of
presentation of information obtained gradually. The sequence effect consists of a primacy effect,
that is, the individual gives higher weight to the earliest information received so that the final
decision taken tends to be influenced by the initial information, and the recency effect, is the
individual gives more weight high against the most recent information received so that the final
decision taken tends to be influenced by the final information.

This sequence effect is very likely to occur in the field of management accounting, one of
which is in the preparation of the company's annual budget that takes several months to process
related information. This study refers to the belief-adjustment model (Hogarth and Einhorn, 1992)
assuming that the task of budgeting is a familiar task performed by managers, and uses some short
series information for the purpose of simplifying the experimental case. Sequential effects have a
negative impact in management decisions, especially budgeting. For example, when a manager
obtains information from a management accountant regarding the budget to be organized, the
information can be either positive or negative. The process of obtaining the information-can also
be gradual or simultaneous which can lead to sequence effects. This will lead to biased decision
making in the preparation of the budget. The numbers targeted to be achieved in the budget become
less relevant and impact on the accuracy of the achievement of targets.