Comments on Wilson and Jensen.

Abstract The article presents the author's opinions on the articles: "Auditing: Perspectives From Multi-Person Decision Theory," by Robert Wilson, and "Organization Theory and Methodology," by Michael C. Jensen; published in the April 1, 1983 issue of the periodical "Accounting Review." Wilson's research during the past 15 years on multi-person game theory has already had a major impact on accounting research. Wilson's paper features the role of reputation in understanding the market for auditing services. Wilson approaches information fineness as a strategic issue of information disclosure. That is, firms know their marginal costs for decision purposes but are purposely concealing them, due to competitive considerations, from the public. Jensen advocates the application of the positive theory to accounting research. The positive theory received visibility from its use in economics to explain the aggregate phenomena. It was subsequently extended with considerable success to understanding the behavior of capital markets in finance. With this theory, assumptions are made about the preferences of individual economic agents, the agents are assumed to make maximizing decisions in a production or exchange economy, and the researcher attempts to predict the resulting market structure.