Bias Due to Visual Illusion in the Graphical Presentation of Accounting Information

Abstract

Graphical displays of information are among the most common decision aids available. Recent research has focused on how graphs that have been prepared without following key preparation guidelines impact decision making. This paper adds to the literature by demonstrating that visual illusion may bias decision makers who view data from the graph, even if the graphs are prepared according to key-preparation guidelines. The investigation of a visual illusion (i.e., an unintended consequence even in a correctly depicted graph) contrasts with prior studies in accounting that have typically examined manipulated graphs (i.e., intentionally distorted, incorrectly depicted graphs). A laboratory study incorporated a 2×2 design to examine the effects of the so-called “Poggendorff illusion” and the possible mitigating effect of adding horizontal gridlines. It shows that decision makers may systematically underestimate or overestimate the values displayed on line graphs. In addition, this research suggests that the bias can be moderated by including horizontal gridlines on line graphs. Adding horizontal gridlines also reduces the variance in some values decision makers view in graphs. The results have both theoretical and practical implications for information display.