Abstract

In this study we examine the effect of the presence of irrelevant performance information on the rank order decisions made by supervisors in relative performance evaluation (RPE). Specifically, we investigate the effect of two types of irrelevant performance information patterns in what has been termed an asymmetric dominated decoy and a viable decoy. We also examine whether relative performance information (RPI) size (evaluating 3 versus 9 subordinates at a time) can moderate the adverse influence of irrelevant information. The empirical results from our experiment support that the asymmetrically dominated decoy information pattern (where an additional subordinate is included in the RPE whose performance is similar to and is dominated by one of the original subordinates – referred to as the target subordinate) can increase the rank ordering of the target subordinate. Contrary to our expectation, we do not find that the viable decoy information pattern (where an additional subordinate is included in the RPE whose performance is partially dominating the target subordinate) has a significant influence on the rank ordering decisions of subordinates. Our results also provide support for an interaction between the decoy information and RPI size for the asymmetric dominated decoy such that the rank order effect is only present when the RPI size is small (evaluating 3 subordinates in our case). Our study informs designers of accounting information systems in several ways.

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