Managerial Mental Accounting and Downstream Project Decisions

• 成果类型: Article
• 署名作者: Baucells, Manel; Grushka-Cockayne, Yael; Hwang, Woonam
• 署名单位: University of Virginia; Utah System of Higher Education; University of Utah
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.02929
• 发表日期: 2025
• 关键词: project management; behavioral operations; Mental accounting; earned value analysis

摘要

Project leaders are responsible for planning, controlling, and revising projects. As a project unfolds, the leader evaluates the project's progress by comparing ongoing costs and scope to a baseline plan and considers potential revisions. We offer a general model of managerial mental accounting, which includes loss aversion, reference point updating, and narrow framing, and examine how it impacts downstream decisions. Our model predicts insufficient adjustments of project scope and cost at revision, resulting in reduced financial profit. We show that the choice of measure to quantify the project progress-planned, actual, or earned-affects the updating of reference points, and hence the downstream decisions. Thus, progress measures could be wisely employed to mitigate insufficient adjustments. It turns out that measuring progress via planned scope is often advantageous, whereas utilizing earned value for cost is never advisable.