Usage of the Lens and Subjective Probability Paradigms for Financial Research Purposes

By William F. Wright
1979| Working Paper No. 527

Two basic paradigms have been used by accounting researchers to model and evaluate financial judgments relative to environmental conditions; the Brunswik Lens and subjective probability (SP) paradigms. Here the Lens and SP paradigms are compared in terms of their appropriateness for typical research issues in accounting. Specific topics considered include the assumptions and technical properties of the models, descriptive statistics generated, environmental comparisons typically made and the effort required to utilize the paradigms. Guidance is provided for researchers comtemplating usage of the paradigms.