The work presented here investigates the process by which one group of individuals solves the problem of detecting deceptions created by other agents. A field experiment was conducted in which twenty-four auditors (partners in international public accounting firms) were asked to review four cases describing real companies that, unknown to the auditors, had perpetrated financial frauds. While many of the auditors failed to detect the manipulations in the cases, a small number of auditors were consistently successful. Since the detection of (...) frauds occurs infrequently in the work of a given auditor, we explain success by the application of powerful heuristics gained from experience with deceptions in everyday life. These heuristics implement a variation of Dennett's intentional stance strategy, which is based on interpreting detected inconsistencies in the light of the Deceiver's (i.e., management's) goals and possible actions. We explain failure to detect deception by means of perturbations (bugs) in the domain knowledge of accounting needed to apply these heuristics to the specific context of financial statement fraud. We test our theory by showing that a computational model of fraud detection that employs the proposed heuristics successfully detects frauds in the cases given to the auditors. We then modify the model by introducing perturbations based on the errors made by each of the auditors in the four cases. The resulting models account for 84 of the 96 observations (i.e., 24 auditors × four cases) in our data. (shrink)

The work presented here investigates the process by which one group of individuals solves the problem of detecting deceptions created by other agents. A field experiment was conducted in which twenty‐four auditors (partners in international public accounting firms) were asked to review four cases describing real companies that, unknown to the auditors, had perpetrated financial frauds. While many of the auditors failed to detect the manipulations in the cases, a small number of auditors were consistently successful. Since the detection of (...) frauds occurs infrequently in the work of a given auditor, we explain success by the application of powerful heuristics gained from experience with deceptions in everyday life. These heuristics implement a variation of Dennett's intentional stance strategy, which is based on interpreting detected inconsistencies in the light of the Deceiver's (i.e., management's) goals and possible actions. We explain failure to detect deception by means of perturbations (bugs) in the domain knowledge of accounting needed to apply these heuristics to the specific context of financial statement fraud. We test our theory by showing that a computational model of fraud detection that employs the proposed heuristics successfully detects frauds in the cases given to the auditors. We then modify the model by introducing perturbations based on the errors made by each of the auditors in the four cases. The resulting models account for 84 of the 96 observations (i.e., 24 auditors × four cases) in our data. (shrink)

One of the most debated questions in psychology and cognitive science is the nature and the functioning of the mental processes involved in deductive reasoning. However, all existing theories refer to a specific deductive domain, like syllogistic, propositional or relational reasoning.Our goal is to unify the main types of deductive reasoning into a single set of basic procedures. In particular, we bring together the microtheories developed from a mental models perspective in a single theory, for which we provide a formal (...) foundation. We validate the theory through a computational model (UNICORE) which allows fine‐grained predictions of subjects' performance in different reasoning domains.The performance of the model is tested against the performance of experimental subjects—as reported in the relevant literature—in the three areas of syllogistic, relational and propositional reasoning. The computational model proves to be a satisfactory artificial subject, reproducing both correct and erroneous performance of the human subjects. Moreover, we introduce a developmental trend in the program, in order to simulate the performance of subjects of different ages, ranging from children (3–6) to adolescents (8–12) to adults (>21). The simulation model performs similarly to the subjects of different ages.Our conclusion is that the validity of the mental model approach is confirmed for the deductive reasoning domain, and that it is possible to devise a unique mechanism able to deal with the specific subareas. The proposed computational model (UNICORE) represents such a unifying structure. (shrink)

Individual differences in performance on a variety of selection tasks were examined in three studies employing over 800 participants. Nondeontic tasks were solved disproportionately by individuals of higher cognitive ability. In contrast, responses on two deontic tasks that have shown robust performance facilitationthe Drinking-age Problem and the Sears Problem-were unrelated to cognitive ability. Performance on deontic and nondeontic tasks was consistently associated. Individuals in the correct/correct cell of the bivariate performance matrix were over-represented. That is, individuals giving the modal response (...) on a nondeontic task (P and Q) were significantly less likely to give the modal response on a deontic task (P and not-Q) than were individuals who made the non-modal P and not-Q selection on nondeontic problems. The implications of the results are discussed within the heuristic-analytic framework of Evans (1996; Evans & Over, 1996) and the optimal data selection model of Oaksford and Chater (1994). (shrink)

When reasoning about deontic rules (what one may, should, or should not do in a given set of circumstances), reasoners adopt a violation‐detection strategy, a strategy they do not adopt when reasoning about indicative rules (descriptions of purported state of affairs). I argue that this indicative‐deontic distinction constitutes a primitive in the cognitive architecture. To support this claim, I show that this distinction emerges early in development, is observed regardless of the cultural background of the reasoner, and can be selectively (...) disrupted at the neurological level. I also argue that this distinction emerged as a result of selective pressure favouring the evolution of reasoning strategies that determine survival within dominance hierarchies. (shrink)