In: Accounting
Provide an example and explain how cognitive dissonance impacted those involved.
Cognitive dissonance occurs when a person’s beliefs run counter to the behavior of that person. This causes a feeling of discomfort and this feeling is known as cognitive dissonance. In other words cognitive dissonance is that situation which involves conflicting attitudes, beliefs and behaviors.
An example of cognitive dissonance is when managers manipulate the books of accounts to reduce their tax burden (behavior) and they know that in the long run they face the risk of being caught be federal agencies (cognition). In such a situation managers are in a state of cognitive dissonance.
The impact on those involved will be a constant effort to reduce the feeling of discomfort by trying to reduce the amount of conflict in the future by resolving one of the conflicting beliefs. In the above example the ethical managers in the long run will start believing that the decision to manipulate books of accounts is a rational one and this will reduce the conflicts in their thoughts.