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When an agent receives information from a source whose accuracy might be either high or low, standard theory dictates that she update as if the source has medium accuracy. In a lab experiment, subjects deviate from this benchmark by reacting less to uncertain sources, especially when the sources release good news. This pattern is validated using observational data on stock price reactions to analyst earnings forecasts, where analysts with no forecast records are classified as uncertain sources. A theory of belief updating where agents are insensitive and averse to uncertainty in information accuracy can explain these results.

I study information diffusion in a social network where a third party can control the precision of information as well as who initially receives information. Applications include spreading of news by digital media outlets, lobbyists persuading senators to contribute to a project and others. A designer engages in a bayesian persuasion game with multiple agents, but is constrained to send information privately to a subset of agents. The agents can communicate this information to each other through links in a social network. The designer relies on this word-of-mouth communication channel to diffuse information. The optimal precision of information sent by the designer reflects a fundamental tradeoff: precise information increases diffusion, but reduces the designer’s ability to manipulate the agents’ beliefs to- wards his objective. The optimal seeding strategy involves choosing an agent with the highest “influence”, a novel centrality measure that is determined in endogenously by information accuracy and the network structure. As preferences become more diverse, I show that there exists equilibrium with sub- optimal spreading where the designer caters only to agents relatively more aligned towards his objective.

Prior research has shown that managers tend to compress ratings when subjectively evaluating employees and that such compression can have negative organizational consequences. We reason that organizations can use the design of their control system to influence the personal costs and benefits associated with managers’ rating decisions and thus shape managers’ rating behavior. Based on findings from prior literature, we focus on the effects of two control system design elements: the accuracy of the information on which managers need to base their evaluations and the transparency about performance evaluation outcomes. We hypothesize that increasing information accuracy will increase the extent to which managers differentiate between stronger and weaker employees, but only when there is transparency about evaluation outcomes. Our experimental data support this hypothesis, and we discuss the implications of our findings for management accounting theory and practice.

This exploratory study investigates how subjects react to varying levels of information integrity impairment when making performance assessments using information of different information dimensions and quantitative performance. Participants completed a performance evaluation task that relied on performance metrics for four information dimensions based on the popular multi-dimensional Balanced Scorecard (Kaplan 2006). In each information dimension, the effects of four information integrity attributes (completeness, currency, accuracy and authorization) and two levels of quantitative performance (high and low) on performance evaluations and decision maker confidence were examined. Participants assessed the performance of division managers and reported their confidence in their evaluations. We find that the level of information integrity affects both participants' performance evaluations and confidence in their judgments. These effects vary by information dimensions and information integrity attributes. Participants rewarded managers for providing complete and authorized information and they derived confidence from the completeness of the information. Participants' evaluations and confidence judgments were not sensitive to information accuracy; i.e., whether the information was based solely on managers' estimates or based on data provided by the corporate information system. Also, information integrity affected decision makers' performance evaluations and confidence judgments in the financial, customer related and learning and growth dimensions, but not the internal business process dimension, despite the fact that in a business organization it is likely that the level of information integrity would be associated with the quality of internal business processes.