Analysis of Cognitive Bias and Ambiguity in Managerial Accounting Decision Making

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Jawa— Cognitive Bias and Organizational Ambiguity Undermine Financial Decision Accuracy in Military Institutions. The research conducted by Aprian Pitra Gustama and Sofia Windiarti, and published in January 2026 in the International Journal of Business and Applied Economics.

The research conducted by Aprian Pitra Gustama and Sofia Windiarti reveals that psychological bias and organizational ambiguity remain the main factors hindering the accuracy of managerial accounting decision-making in the military environment. This study shows that overconfidence, dependence on outdated data, as well as unclear information and work roles can reduce the quality of budgeting planning and financial supervision at the Iskandar Muda Military Regional Command, Aceh. These findings are important because they relate to the accountability of state financial management in the defense sector.

Financial Management Challenges in Military Organizations

As a public institution, the military is responsible for managing state funds efficiently, transparently, and responsibly. Budgets are used to support operations, logistics, training, and other strategic activities.

Unlike private companies, however, decision-making in military organizations takes place within highly hierarchical structures, under strong time pressure, and within rigid bureaucratic procedures. These conditions often limit thorough financial analysis.

In such environments, decision makers tend to rely on personal experience, intuition, and established routines. This is where cognitive bias and organizational ambiguity begin to influence financial decisions.

According to the researchers, many financial decisions in public institutions are still shaped by psychological factors rather than purely objective data.

Research Method: Interviews and Direct Observation

The study employed a descriptive qualitative approach to explore the real experiences of financial decision makers.

The research was conducted at the Iskandar Muda Military Command in Banda Aceh, which was selected because of its complex budgeting system and multi-layered organizational structure.

The researchers interviewed key officials involved in planning, supervision, and financial administration. Data were also collected through non-participant observation and analysis of budget documents and financial reports.

All data were analyzed through systematic stages of reduction, presentation, and conclusion drawing. Validity was ensured through source triangulation, peer discussion, and member checking.

This approach enabled the researchers to gain in-depth insight into everyday decision-making practices.

Key Findings: Bias and Ambiguity Remain Dominant

The results show that managerial accounting decisions at the Iskandar Muda Command are influenced not only by formal procedures, but also by psychological and organizational factors.

1. Overconfidence Bias

Many decision makers rely too heavily on past experience when preparing budgets and setting priorities.

While confidence speeds up decision making, it often reduces analytical accuracy, especially when operational conditions change.

As a result, budget estimates may become unreliable.

2. Anchoring on Previous Data

The study found that budget figures from previous years are frequently used as the main reference for new plans.

Even when circumstances change, adjustments tend to be limited because decisions remain “anchored” to initial numbers.

This practice makes budgets less responsive to real needs.

3. Availability Bias

Decision makers often focus more on memorable past cases than on updated financial data.

Issues that were frequently discussed in the past receive more attention, while other relevant information is overlooked.

This weakens comprehensive analysis.

4. Unclear Information, Roles, and Goals

In addition to cognitive bias, the study identified strong organizational ambiguity, including:

Delayed or incomplete financial reports
Overlapping responsibilities between units
Different interpretations of organizational priorities

These conditions increase uncertainty in decision making.

Combined Impact: Intuition-Based Decisions

The interaction between cognitive bias and organizational ambiguity encourages decision makers to rely more on intuition and personal judgment.

When information is incomplete and responsibilities are unclear, experience becomes the main reference point. This strengthens the influence of bias and weakens rational analysis.

The study shows that this situation affects:

The accuracy of budget estimates
The quality of performance evaluations
The effectiveness of internal controls

In the long term, these weaknesses reduce financial accountability.

Implications for Public Financial Management

The findings offer important lessons for military institutions and other public organizations.

For Military Institutions

Organizations need to strengthen integrated, fast, and reliable financial information systems. Better data quality reduces dependence on intuition.

For Budget Managers

Continuous training in financial analysis and data-based decision making is essential to improve objectivity.

For Policymakers

The results can support reforms in supervision systems, role clarification, and internal control mechanisms.

For the Public Sector

The study confirms that digitalization alone is not enough. Behavioral and organizational aspects must also be addressed.

Researchers’ Perspective

Aprian Pitra Gustama and Sofia Windiarti emphasize that financial decision quality is shaped by the interaction between systems, people, and organizational structures.

They argue that cognitive bias cannot be completely eliminated, but it can be reduced through education, strong information systems, and effective supervision.

The researchers also stress the importance of raising awareness about psychological risks in decision making.

Author Profiles

Aprian Pitra Gustama, S.E., M.Ak. - Universitas Achmad Yani.
Sofia Windiarti, S.E., M.Ak. - Universitas Achmad Yani.

Research Source

Gustama, Windiarti. Analysis of Cognitive Bias and Ambiguity in Managerial Accounting Decision Making
International Journal of Business and Applied Economics (IJBAE) Volume 5, Nomor 1, 2026, Halaman 505–512
DOI:https://doi.org/10.55927/ijbae.v5i1.599

URL: https://nblformosapublisher.org/index.php/ijbae