Abstract

Organizational agents often need to determine whether business information provided under conflict of interest is intentionally misleading or false. Detecting strategically manipulated information is in general difficult and prone to failure. This research explores the errors made by 18 loan officers when examining misleading financial information. The process traces of the loan officers are compared with the behavior of a cognitive model of detection success derived from Social Contract Theory and the Theory of the Detection of Deception. The results show that one of the keys to successful detection is the ability to ‘coming to think’ about deception, i.e., the ability to begin interpreting perceived anomalies in the received information as generated by the sender’s malicious manipulations. The findings on the distribution of different error types are consistent with the theory, statistically significant, and pragmatically meaningful.

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