Avoiding Decision Traps

Like the other biases, says Bazerman, self-serving biases can be mitigated, but are too strong to eliminate completely. They thus require structural fixes such as formal checks and balances for project approval and monitoring.

For this reason, Bazerman believes the Sarbanes-Oxley Act of 2002 is destined to fail. Auditors, he points out, "still have a motivation to get rehired, to sell tax services, to potentially take jobs with the firms they audit." Without truly independent auditors, investors will still be at the mercy of fallible human judgment.

Edward Teach is articles editor of CFO.

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