Sophisticated investors increasingly use algorithms to analyze firm disclosures. This change has implications for how managers think about their capital market users. In two studies, I examine how (1) expectations of capital market users can affect real and accruals-based earnings management and (2) how these expectations can be the result of systematic cognitive biases in addition to other factors. In the first study, I employ two experiments and a survey to demonstrate that the presence of algorithms can increase the likelihood of real earnings management through one expectation-based mechanism, yet decrease the likelihood of accruals-based earnings management through a second expectation-based mechanism. A survey of experienced managers demonstrates that the expectations that lead to these effects exist within the institutional environment. In the second study, I employ two experiments and a survey to examine how managers’ expectations of investors’ information processing can be systematically biased through a psychological process involving egocentric focus and insufficient adjustment. Both of these studies contribute to existing literature relating to financial disclosure and the emerging literature on how expectations of information processing costs and capabilities can affect manager decision making.