This paper investigates the potential of using a frequency response mode to reduce the dilution effect of non-diagnostic evidence on auditors' fraud risk judgments. In two experiments, we test one hypothesis and examine a research question related to the dilution effect where response mode (frequency versus probability) and type of non-diagnostic or irrelevant information are manipulated between-participants. Results of the hypothesis tests show that auditors' fraud risk judgments demonstrate a significantly lower dilution effect when they evaluate diagnostic and non-diagnostic or irrelevant evidence using a frequency response mode, as compared to the probability response mode; this effect is most pronounced when auditors are provided with favorable non-diagnostic or irrelevant evidence.

JEL Classifications: M4; M40; M420.

Data Availability: Summary data are available from the authors upon request.

Keywords:
dilution, fraud risk, frequency response mode, non-diagnostic information, irrelevant cues
2019
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