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Chapter 6 Perception and Individual Decision Making Page

Chapter 6
Perception and Individual
Decision Making
Chapter Overview

The old saying is that “perception is reality” and managers must learn what “reality” their
workers are reacting to in order to effectively predict behavior. This chapter examines how
perception acts to create an employee’s view of reality and modifies decision making.

Chapter Objectives

After studying this chapter, the student should be able to:

1. Define perception and explain the factors that influence it.
2. Explain attribution theory, and describe the shortcuts used in judging others.
3. Explain the link between perception and decision making.
4. Contrast the rational model of decision making with bounded rationality.
5. Identify the common decision biases or errors.
6. Explain how individual differences and organizational constraints affect decision
making.
7. Contrast the three ethical decision criteria.
8. Define creativity and discuss the three-stage model of creativity.

Suggested Lecture Outline

I. INTRODUCTION
A. This chapter examines perception and the influences on perception. It continues
with an exploration of how individuals make decisions and how perception can
influence those decisions.
II. WHAT IS PERCEPTION?
A. Perception is a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment.
1. However, what we perceive can be substantially different from objective reality. 2.
For example, all employees in a firm may view it as a great place to work— favorable
working conditions, interesting job assignments, good pay, excellent benefits,
understanding and responsible management—but, as most of us know, it’s very
unusual to find such agreement.
3. The study of perception is important simply because people’s behavior is based
on their perceptions of what reality is, not on reality itself.
4. The world as it is perceived is the world that is behaviorally important.
B. Factors Influencing Perception
1. Perceiver: When you look at a target and attempt to interpret what you see, your
interpretation is heavily influenced by your personal characteristics.

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a. Characteristics that affect perception include your attitudes, personality,

motives, interests, past experiences, and expectations.
2. Target: the object being perceived.
a. Characteristics of the target will affect how it is perceived.
b. Things that are bright, beautiful, loud, or unusual are far more likely to be
noticed.
c. The relationship of the target to its background influences perception as
does the human trait of grouping similar things together.
3. Situation: the context in which the perception is made.
a. The context (time, location, light, heat, the appropriateness of attire) can
influence the extent of perception of a target.
C. Person Perception: Making Judgments About Others
1. OB is concerned with “people perception” because how people see each other
can, in large part, determine how well these individuals can work together and
indicate an organization’s level of potential conflict.
a. Person Perception: the perceptions people form about each other.
2. Attribution Theory.
a. Nonliving objects such as desks, machines, and buildings are subject to the
laws of nature, but they have no beliefs, motives, or intentions. People do.
1) That’s why when we observe people, we attempt to explain why they
behave in certain ways.
2) Our perception and judgment of a person’s actions, therefore, will be
significantly influenced by the assumptions we make about that person’s
internal state.
b. Internally Caused Behaviors. Behaviors that are believed to be under the
personal control of the individual.
c. Externally Caused Behaviors. Behaviors that are believed to be outside of the
personal control of the individual. The person is forced into the behavior by
outside causes.
d. Three Factors That Differentiate Internally from Externally Caused
Behaviors.
1) Distinctiveness refers to whether an individual displays different
behaviors in different situations.
a) Is the employee who arrives late today also the one co-workers say
regularly “blows off” commitments?
(1) What we want to know is whether this behavior is unusual.
(2) If it is, we are likely to give it an external attribution.
(3) If it’s not, we will probably judge the behavior to be internal.
2) Consensus is if everyone who faces a similar situation responds in the
same way.
a) The behavior of a tardy employee meets this criterion if all
employees who took the same route to work were also late.
b) From an attribution perspective, if consensus is high, you would
probably give an external attribution to the employee’s tardiness. c) If
other employees who took the same route made it to work on time, you
would attribute his lateness to an internal cause.
3) Consistency
a) An observer looks for consistency in a person’s actions.

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(1) Coming in 10 minutes late for work is not perceived in the same
way for an employee who hasn’t been late for several months as
it is for an employee who is late two or three times a week.
(2) The more consistent the behaviors, the more we are inclined to
attribute it to internal causes.
e. Exhibit 6-1 summarizes the key elements in attribution theory. 1) It tells us,
for instance, that if an employee, Kim, generally performs at about the same
level on other related tasks as she does on her current task (low
distinctiveness), other employees frequently perform differently—better or
worse—than Kim does on that current task (low consensus), and Kim’s
performance on this current task is consistent over time (high consistency),
anyone judging Kim’s work will likely hold her primarily responsible for her
task performance (internal
attribution).
2) One of the most interesting findings from attribution theory research is
that errors or biases distort attributions.
a) When we make judgments about the behavior of other people, we
tend to underestimate the influence of external factors and
overestimate the influence of internal or personal factors.
(1) This fundamental attribution error can explain why a sales
manager is prone to attribute the poor performance of her sales
agents to laziness rather than to the innovative product line
introduced by a competitor.
b) Individuals and organizations also tend to attribute their own
successes to internal factors such as ability or effort, while putting
the blame for failure on external factors such as bad luck or
unproductive co-workers.
(1) This is the self-serving bias.
c) The evidence on cultural differences in perception is mixed, but
generally indicates that there are differences across cultures in the
attributions people make.
(1) Individuals from Asian cultures tend to make group-based
stereotypes, whereas Westerners tend to focus on the individual.
(2) However, while self-serving biases are less common in East
Asian cultures, they do still exist.
3. Common Shortcuts in Judging Others.
a. We use a number of shortcuts when we judge others.
1) These techniques are frequently valuable: they allow us to make
accurate perceptions rapidly and provide valid data for making
predictions.
a) They are not foolproof.
b) They can and do get us into trouble. Understanding these shortcuts
can help you recognize when they can result in significant
distortions.
b. Selective perception allows us to “speed-read” others, but not without the
risk of drawing an inaccurate picture.
1) Any characteristic that makes a person, an object, or an event stand out
will increase the probability that we will perceive it.

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2) It is impossible for us to assimilate everything we see; we can take in

only certain stimuli.
a) This tendency explains why you’re more likely to notice cars like
your own or why a boss may reprimand some people and not others
who are doing the same thing.
b) Because we can’t observe everything going on about us, we engage in
selective perception.
3) Because we see what we want to see, we can draw unwarranted
conclusions from an ambiguous situation.
c. Halo Effect. Drawing an overall impression based on a single characteristic,
such as intelligence, sociability, or appearance.
1) Halo effects can falsely enhance or reduce the perceived overall
characteristics of an individual.
2) This effect can also result in a negative impression.
d. Contrast Effect can distort perceptions.
1) We don’t evaluate a person in isolation.
2) Other persons we have recently encountered influence our reaction to a
person.
e. Stereotyping. Judging an individual based on the perception of a group to
which the target belongs.
1) We rely on generalizations every day because they help us make
decisions quickly; they are a means of simplifying a complex world. It’s
less difficult to deal with an unmanageable number of stimuli if we use
heuristics or stereotypes.
2) The problem occurs, of course, when we generalize inaccurately or too
much. In organizations, we frequently hear comments that represent
stereotypes based on gender, age, race, religion, ethnicity, and even
weight.
3) Stereotypes can be deeply ingrained and powerful enough to influence
life-and-death decisions.
a) One study, controlling for a wide array of factors (such as
aggravating or mitigating circumstances), showed that the degree to
which black defendants in murder trials looked “stereotypically
black” essentially doubled their odds of receiving a death sentence if
convicted.
4) One of the problems of stereotypes is that they are widespread and often
useful generalizations, despite the fact that they may not contain a shred
of truth when applied to a particular person or situation.
5) Thus, we constantly have to check ourselves to make sure we’re not
unfairly or inaccurately applying a stereotype in our evaluations and
decisions. Stereotypes are an example of the warning “The more useful,
the more danger from misuse.”
III. LINK BETWEEN PERCEPTION AND INDIVIDUAL DECISION MAKING A. Individuals
in organizations make decisions, choices from among two or more alternatives.
1. Top managers determine their organization’s goals, what products or services to
offer, how best to finance operations, or where to locate a new manufacturing
plant.

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2. Middle- and lower-level managers set production schedules, select new

employees, and decide how to allocate pay raises.
3. Non-managerial employees decide how much effort to put forth at work and
whether to comply with a request by the boss.
4. In recent years, organizations have been empowering their non-managerial
employees with decision-making authority historically reserved for managers
alone.
B. Individual decision making is thus an important part of organizational behavior.
C. Decision making occurs as a reaction to a problem.
1. That is, a discrepancy exists between the current state of affairs and some
desired state, requiring us to consider alternative courses of action.
2. Most problems don’t come neatly labeled “problem.”
a. One person’s problem is another person’s satisfactory state of affairs.
b. So awareness that a problem exists and that a decision might or might not be
needed is a perceptual issue.
c. Every decision requires us to interpret and evaluate information.
1) We typically receive data from multiple sources and need to screen,
process, and interpret it.
2) The decision maker’s perceptions will answer that question, “Which data
are relevant to the decision, and which are not?”
d. We also need to develop alternatives and evaluate their strengths and
weaknesses.
1) Again, the individual’s perceptual process will affect the final outcome.
2) Finally, throughout the entire decision-making process, perceptual
distortions often surface that can bias analysis and conclusions.
IV. DECISION MAKING IN ORGANIZATIONS
A. Business schools generally train students to follow rational decision-making models.
1. Although these models have considerable merit, they don’t always describe how
people actually make decisions.
2. This is where OB enters the picture: to improve how we make decisions in
organizations, we must understand the decision-making errors people commit
(in addition to the perception errors we’ve discussed).
B. The Rational Model, Bounded Rationality, and Intuition
1. Rational Decision Making: making consistent, value-maximizing choices within
specified constraints.
a. Rational Decision-Making Model. This model has six steps that lead to an
optimal solution.
1) The Six Steps of the Model:
a) Define the problem.
b) Identify decision criteria.
c) Weight the previously identified criteria.
d) Generate possible alternatives.
e) Rate each alternative upon each criterion.
f) Compute the optimal decision.
2) Assumptions of the Model: One of the reasons that this model is rarely
fully utilized in the real world is because the assumptions are almost
never all met.
a) Complete knowledge. The decision maker is assumed to have
complete knowledge of the situation.

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b) Known options. The decision maker is assumed to be able to identify

all relevant options in an unbiased manner.
c) Highest utility. The assumption is that the decision maker will
always choose the option with the highest utility.
2. Bounded Rationality
a. The limited information-processing capability of human beings makes it
impossible to assimilate and understand all the information necessary
to optimize.
1) So most people respond to a complex problem by reducing it to a level at
which they can readily understand it.
2) Also many problems likely don’t have an optimal solution because they
are too complicated to be broken down into the parameters of the
rational decision-making model.
3) So people satisfice; that is, they seek solutions that are satisfactory and
sufficient.
b. Because the human mind cannot formulate and solve complex problems
with full rationality, we operate within the confines of bounded rationality.
1) We construct simplified models that extract the essential features from
problems without capturing all their complexity.
2) We can then behave rationally within the limits of the simple model. 3)
How does bounded rationality work for the typical individual? a) Once
we’ve identified a problem, we begin to search for criteria and alternatives.
b) But the list of criteria is likely to be far from exhaustive.
c) We identify a limited list of the most conspicuous choices, both easy
to find and highly visible, that usually represent familiar criteria and
tried-and-true solutions.
d) Next, we begin reviewing them, but our review will not be
comprehensive.
e) Instead, we focus on alternatives that differ only in a relatively small
degree from the choice currently in effect.
f) Following familiar and well-worn paths, we review alternatives only
until we identify one that is “good enough”—that meets an
acceptable level of performance.
g) That ends our search.
h) So the solution represents a satisficing choice—the first acceptable
one we encounter—rather than an optimal one.
(1) This process of satisficing is not always a bad idea—using a
simple process may frequently be more sensible than the
traditional rational decision-making model.
4) To use the rational model in the real world, you need to gather a great
deal of information about all the options, compute applicable weights,
and then calculate values across a huge number of criteria.
a) All these processes can cost you time, energy, and money.
b) And if there are a great number of unknowns when it comes to
weights and preferences, the fully rational model may not be any
more accurate than a best guess.
c) Sometimes a fast-and-frugal process of solving problems might be
your best option.

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 3. Intuition
a. Perhaps the least rational way of making decisions is to rely on intuition. b.
Intuitive decision making is an unconscious process created from distilled
experience.
1) Its defining qualities are that:
a) it occurs outside conscious thought;
b) it relies on holistic associations, or links between disparate pieces of
information;
c) it’s fast;
d) and it’s affectively charged, meaning it usually engages the emotions.
c. Although intuition isn’t rational, it isn’t necessarily wrong.
d. Nor does it always operate in opposition to rational analysis; rather, the two
can complement each other.
e. But intuition is not superstition, or the product of some magical or
paranormal sixth sense.
V. COMMON BIASES AND ERRORS IN DECISION MAKING
1. Decision makers engage in bounded rationality, but they also allow systematic
biases and errors to creep into their judgments.
a. To minimize effort and avoid difficult trade-offs, people tend to rely too
heavily on experience, impulses, gut feelings, and convenient rules of thumb. b.
In many instances, these shortcuts are helpful. However, they can lead to severe
distortions of rationality.
c. Following are the most common biases in decision making.
1) Overconfidence Bias.
a) The likelihood of overestimating the probability of being correct.
b) Tends to decrease as intellectual and interpersonal abilities rise:
knowledge reduces overconfidence.
2) Anchoring Bias.
a) The tendency to fixate on initial information and fail to adequately
adjust for subsequent information.
b) The first information given forms the basis for the process, no matter
what additional information is provided later.
3) Confirmation Bias.
a) This bias represents a specific case of selective perception.
Information used in decision making is selectively gathered:
information that reaffirms past choices is amplified, while data that
contradicts those choices is discounted.
b) Information that agrees with preconceived views is accepted at face
value, while other information is criticized skeptically.
4) Availability Bias.
a) The tendency for people to base their judgments on information that
is readily available to them.
b) Emotional, vivid, or recent events tend to be more available in the
minds of decision makers and therefore carry a greater weight in
decision making.
c) Causes people to overestimate the chances of unlikely but vivid
events and underestimate chances of more likely, but less dramatic,
events.
5) Escalation of Commitment.

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 a) This bias refers to staying with an initial decision through a series of
follow-on decisions, even when there is clear evidence that the initial
decision was wrong.
b) This bias often occurs when the decision maker views himself or
herself as responsible for the failure.
6) Risk Aversion.
a) Nearly everyone but committed gamblers would rather have the
sure thing than a risky prospect.
b) This tendency to prefer a sure thing over a risky outcome is risk
aversion.
(1) Risk aversion has important implications.
(2) To offset the risks inherent in a commission-based wage,
companies pay commissioned employees considerably more
than they do those on straight salaries.
(3) Risk-averse employees will stick with the established way of
doing their jobs, rather than taking a chance on innovative or
creative methods.
(4) Sticking with a strategy that has worked in the past does
minimize risk, but in the long run it will lead to stagnation.
(5) Ambitious people with power that can be taken away (most
managers) appear to be especially risk averse, perhaps because
they don’t want to lose on a gamble everything they’ve worked
so hard to achieve.
(6) CEOs at risk of being terminated are also exceptionally risk
averse, even when a riskier investment strategy is in their firms’
best interests.
7) Hindsight Bias.
a) The tendency to believe (falsely) once the outcome of an event is
actually known, that the results could have been accurately
predicted.
b) This bias reduces our ability to learn from the past and falsely
inflates our opinion of our ability to make accurate predictions.
VI. ORGANIZATIONAL CONSTRAINTS ON DECISION MAKING
A. Organizations can constrain decision makers, creating deviations from the rational
model. These constraints can take the form of:
1. Performance Evaluations. People are strongly influenced in their decision
making by the criteria on which they are evaluated.
2. Reward Systems. The reward system influences which choices are preferable in
terms of a personal payoff.
3. Formal Regulations. Rules and policies limit the decision maker’s choice of
action.
4. System-Imposed Time Constraints. Explicit deadlines create time pressures and
often make it difficult to gather necessary information prior to making the
decision.
5. Historical Precedence. Commitments that have already been made constrain
current options. The historic context of a decision limits available alternatives. VII. WHAT
ABOUT ETHICS IN DECISION MAKING?
A. Three Ethical Decision Criteria:

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 1. The first ethical yardstick is utilitarianism, in which decisions are made solely on
the basis of their outcomes, ideally to provide the greatest good for the greatest
number.
a. This view dominates business decision making. It is consistent with goals
such as efficiency, productivity, and high profits.
2. Another ethical criterion is to make decisions consistent with fundamental
liberties and privileges, as set forth in documents such as the Bill of Rights. a.
An emphasis on rights in decision making means respecting and protecting
the basic rights of individuals, such as the right to privacy, free speech, and
due process.
b. This criterion protects whistleblowers when they reveal an organization’s
unethical practices to the press or government agencies, using their right to
free speech.
3. A third criterion is to impose and enforce rules fairly and impartially to ensure
justice or an equitable distribution of benefits and costs.
a. Union members typically favor this view.
b. It justifies paying people the same wage for a given job regardless of
performance differences and using seniority as the primary determination
in layoff decisions.
4. Each criterion has advantages and liabilities.
a. A focus on utilitarianism promotes efficiency and productivity, but it can
sideline the rights of some individuals, particularly those with minority
representation.
b. The use of rights protects individuals from injury and is consistent with
freedom and privacy, but it can create a legalistic environment that hinders
productivity and efficiency.
c. A focus on justice protects the interests of the underrepresented and less
powerful, but it can encourage a sense of entitlement that reduces risk
taking, innovation, and productivity.
5. Decision makers, particularly in for-profit organizations, feel comfortable with
utilitarianism.
6. The “best interests” of the organization and its stockholders can justify a lot of
questionable actions, such as large layoffs.
7. But many critics believe this perspective needs to change.
a. Public concern about individual rights and social justice suggests managers
should develop ethical standards based on non-utilitarian criteria.
b. This presents a challenge because satisfying individual rights and social
justice creates far more ambiguities than utilitarian effects on efficiency and
profits.
c. This helps explain why managers are increasingly criticized for their actions.
1) Raising prices, selling products with questionable effects on consumer health,
closing down inefficient plants, laying off large numbers of
employees, moving production overseas to cut costs, and similar
decisions can be justified in utilitarian terms.
2) But that may no longer be the single measure by which good decisions
are judged.
B. Creativity in Organizations.

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1. Although the rational decision-making model will often improve decisions, a
decision maker also needs creativity, the ability to produce novel and useful
ideas.
2. Novel ideas are different from what’s been done before but are appropriate for
the problem.
3. Although all aspects of organizational behavior have complexities, that is
especially true for creativity.
4. The three-stage model of creativity: the core of the model is creative behavior,
which has both causes (predictions of creative behavior) and effects (outcomes
of creative behavior).
5. Creative Behavior. Creative behavior occurs in four steps, each of which leads to
the next (Exhibit 6-4):
a. Problem formulation. Any act of creativity begins with a problem that the
behavior is designed to solve. Thus, problem formulation is defined as the
stage of creative behavior in which we identify a problem or opportunity
that requires a solution as yet unknown.
b. Information gathering. Given a problem, the solution is rarely directly at
hand. We need time to learn more and to process that information. Thus,
information gathering is the stage of creative behavior when possible
solutions to a problem incubate in an individual’s mind.
c. Idea generation. Once we have collected the relevant information, it is time to
translate knowledge into ideas. Thus, idea generation is the process of
creative behavior in which we develop possible solutions to a problem from
relevant information and knowledge.
1) Increasingly, idea generation is collaborative.
d. Idea evaluation. Finally, it’s time to choose from the ideas we have generated.
Thus, idea evaluation is the process of creative behavior in which we
evaluate potential solutions to identify the best one.
1) Sometimes, the method of choosing can be innovative.
2) Generally, you want those who evaluate ideas to be different from those
who generate them, to eliminate the obvious biases.
6. Causes of Creative Behavior. Having defined creative behavior, the main stage in
the three-stage model, we now look back to the causes of creativity: creative
potential and creative environment.
a. Creative Potential. Is there such a thing as a creative personality? Indeed.
While creative genius – whether in science (Albert Einstein), art (Pablo
Picasso), or business (Steve Jobs) – is scarce, most people have some of the
characteristics shared by exceptionally creative people.
1) The more of these characteristics we have, the higher our creative
potential.
2) Intelligence is related to creativity. Smart people are more creative
because they are better at solving complex problems. However,
intelligent people may also be more creative because they have greater
“working memory”; that is, they can recall more information that is
related to the task at hand.
3) The Big Five personality trait of openness to experience correlates with
creativity, probably because open individuals are less conformist in
action and more divergent in thinking.

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 (1) Other traits of creative people include proactive personality, self
confidence, risk taking, tolerance for ambiguity, and perseverance.
4) Expertise is the foundation for all creative work and thus is the single
most important predictor of creative potential.
a) The potential for creativity is enhanced when individuals have
abilities, knowledge, proficiencies, and similar expertise to their field
of endeavor.
(1) For instance, you wouldn’t expect someone with minimal
knowledge of programming to be very creative as a software
engineer.
b. Creative Environment. Most of us have creative potential we can learn to
apply, but as important as creative potential is, by itself it is not enough. 1)
We need to be in an environment where creative potential can be
realized.
2) What environmental factors affect whether creative potential translates
into creative behaviors?
a) First and perhaps most important is motivation. If you aren’t
motivated to be creative, it is unlikely you will be. This link is true
regardless of whether we are talking about student creativity or
employee creativity.
b) It is also valuable to work in an environment that rewards and
recognizes creative work. The organization should foster the free
flow of ideas, including providing fair and constructive judgment.
(1) Freedom from excessive rules encourages creativity;
employees should have the freedom to decide what work is to
be done and how to do it.
c. Creative Outcomes. The final stage in our model of creativity is the outcome.
Creative behavior does not always produce a creative or innovative
outcome.
1) An employee might generate a creative idea and never share it.
Management might reject a creative solution. Teams might squelch
creative behaviors by isolating those who propose different ideas.
a) When people feel uncertain, their ability to see any idea as creative is
blocked.
2) We can define creative outcomes as ideas or solutions judged to be novel
and useful by relevant stakeholders.
a) Novelty itself does not generate a creative outcome if it isn’t useful. b)
Thus, “off-the-wall” solutions are creative only if they help solve the
problem.
c) The usefulness of the problem might be self-evident, or it might be
considered successful by stakeholders before the actual success can
be known.
3) Creative ideas do not implement themselves; translating them into
creative outcomes is a social process that requires utilizing other
concepts addressed in this text, including power and politics, leadership,
and motivation.
VIII. IMPLICATIONS FOR MANAGERS

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 A. Behavior follows perception, so to influence employee behavior at work, assess how
employees perceive their work. Often behaviors we find puzzling can be explained
by understanding the initiating perceptions.
B. Make better decisions by recognizing perceptual biases and decision-making errors
we tend to commit. Learning about these problems doesn’t always prevent us from
making mistakes, but it does help.
C. Adjust your decision-making approach to the national culture you’re operating in and
to the criteria your organization values. If you’re in a country that doesn’t value
rationality, don’t feel compelled to follow the decision-making model or to try to
make your decisions appear rational. Adjust your decision approach to ensure
compatibility with the organizational culture.
D. Combine rational analysis with intuition. These are not conflicting approaches to
decision making. By using both, you can improve your decision-making
effectiveness.
E. Try to enhance your creativity. Actively look for novel solutions to problems, attempt
to see problems in new ways, use analogies, and hire creative talent. Try to remove work
and organizational barriers that might impede your creativity. IX. KEEP IN MIND
A. People have inherent biases in perception and decision making.
1. Understanding those biases allows for better prediction of behavior.
B. Biases can be helpful.
1. Managers must determine when the bias may be counterproductive.
C. Creativity aids in decision making.
D. Helps to appraise, understand, and identify problems.
X. SUMMARY
A. Individuals base their behavior not on the way their external environment actually
is but rather on what they see or believe it to be.
1. An understanding of how people make decisions can be helpful for explaining
and predicting their behavior.
2. But few important decisions are simple or unambiguous enough for the rational
model’s assumptions to apply.
3. Thus, we find individuals looking for solutions that satisfice rather than
optimize, injecting biases and prejudices into the decision process, and relying
on intuition.
B. Managers should encourage creativity in employees and teams to create a route to
innovative decision making.

Discussion Questions

1. Ask the class members to think of places they have worked or organizations they
have been associated with. They should identify decisions that they observed being
made by people within the organization. Ask them to rate the decision on the
following scale:

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2. Suppose a worker went out of her way to help the boss complete a project on time.
Some of her co-workers saw that behavior and thought she was selfishly trying to
curry favor with the boss; others saw her as a great example of how employees
should act in a progressive company. Why do these two very different
interpretations come about?

3. What criteria are used by people when attributing a behavior to either external or
internal causes? Describe these three criteria.

4. People often use shortcuts such as selective perception and stereotyping to judge
other people more quickly. What are the good and bad aspects of this type of
perceptual “fast track”?

5. How does perception affect the decision-making process?

6. Describe the steps of the rational decision-making process. Use buying a car as an
example.

7. How does decision making under bounded rationality differ from that done under
rational decision making?

8. Choose one of the common decision-making biases that you have either personally
experienced or which you are “guilty” of and describe the following: (1) what error
was involved, (2) what were the circumstances, and (3) how did the bias affect the
outcome of the situation?

9. Which ethical viewpoint do you think is the best? Describe the viewpoint and
explain your choice.

10. Using the three-component model for creativity, which area do you believe would
be easiest for managers to affect? Why?

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