Perception

and Individual
Decision Making
What Is Perception, and Why Is It
Important?
Perception
A process by which ••People’s
individuals organize and People’sbehavior
behavior isis
based
basedon ontheir
their
interpret their sensory
impressions in order to perception
perceptionof of what
what
give meaning to their reality
realityis,
is,not
not on
onreality
reality
environment. itself.
itself.
••The
Theworld
worldas
asititisis
perceived
perceivedisis the
theworld
world
that
thatisisbehaviorally
behaviorally
important.
important.
 Factors
that
Influence
Perceptio
n
 Person Perception: Making
Judgments About Others
Attribution Theory
When individuals observe
behavior, they attempt to
determine whether it is
internally or externally
caused.

Distinctiveness:
Distinctiveness:Shows
Showsdifferent
differentbehaviors
behaviorsinindifferent
differentsituations.
situations.
Consensus:
Consensus:Response
Responseisisthe
thesame
sameas
asothers
otherstotosame
samesituation.
situation.
Consistency:
Consistency:Responds
Respondsininthe
thesame
sameway
wayover
overtime.
time.
Attribution Theory
Errors and Biases in Attributions
Fundamental Attribution Error
The tendency to underestimate the
influence of external factors and
overestimate the influence of
internal factors when making
judgments about the behavior of
others

In
Ingeneral,
general,wewe
tend
tendto
toblame
blamethe the
person
personfirst,
first, not
not
the
thesituation.
situation.
Errors and Biases in Attributions
(cont’d)
Self-Serving Bias Thought:
Thought:When
When
The tendency for individuals to students
studentsgetgetanan“A”
“A”on
on
attribute their own successes to an
anexam,
exam, they
theyoften
often
internal factors while putting the say
saythey
theystudied
studiedhard.
hard.
blame for failures on external But
Butwhen
whenthey
they don’t
don’t
factors do
dowell,
well, how
howdoes
doesthe
the
self-serving
self-servingbias
bias
come
comeinto
intoplay?
play?
Hint:
Hint:Whose
Whosefault
fault isisitit
usually
usuallywhen
whenan
anexam
exam
isis“tough”?
“tough”?
 Frequently Used Shortcuts in
Judging Others
Selective Perception
People selectively interpret what they see on the basis
of their interests, background, experience, and
attitudes.
 Frequently Used Shortcuts in
Judging Others
Halo Effect
Drawing a general impression
about an individual on the basis
of a single characteristic

Contrast Effects
Evaluation of a person’s characteristics that are
affected by comparisons with other people
recently encountered who rank higher or lower on
the same characteristics
 Frequently Used Shortcuts in
Judging Others
Projection
Attributing one’s own
characteristics to other
people

Stereotyping
Judging someone on the
basis of one’s perception of
the group to which that person
belongs
 Specific Applications in
Organizations
• Employment Interview - Perceptual biases of raters
affect the accuracy of interviewers’ judgments of
applicants
• Performance Expectations- Self-fulfilling prophecy
(Pygmalion effect): The lower or higher performance
of employees reflects preconceived leader
expectations about employee capabilities.
• Ethnic Profiling- A form of stereotyping in which a
group of individuals is singled out—typically on the
basis of race or ethnicity—for intensive inquiry,
scrutinizing, or investigation
 Specific Applications in
Organizations (cont’d)
• Performance Evaluations
– Appraisals are often the subjective
(judgmental) perceptions of appraisers of
another employee’s job performance.
The Link Between Perceptions
and Individual Decision Making
Problem
A perceived discrepancy
between the current state of
affairs and a desired state Perception
Perceptionof
of
the
theDecision
Decision
Maker
Maker
Decisions
Choices made from among
alternatives developed from
data perceived as relevant

Outcomes
Assumptions of the Rational
Decision-making Model
Rational Decision-
making Model Model
ModelAssumptions
Assumptions
Describes how individuals •• Problem
Problemclarity
clarity
should behave in order to •• Known
Knownoptions
options
maximize some outcome
•• Clear
Clearpreferences
preferences
•• Constant
Constantpreferences
preferences
•• No
Notime
timeor
orcost
cost
constraints
constraints
•• Maximum
Maximumpayoff
payoff
 Steps in the Rational Decision-
making Model
1. Define the problem.
2. Identify the decision criteria.
3. Allocate weights to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.
 The Three Components of
Creativity
Creativity
The ability to produce novel
and useful ideas

Three-Component
Model of Creativity
Proposition that individual
creativity requires expertise,
creative-thinking skills, and
intrinsic task motivation

Source: T.M. Amabile, “Motivating Creativity in Organizations,” California Management Review, Fall 1997, p. 43.
 How Are Decisions Actually
Made in Organizations?
Bounded Rationality
Individuals make decisions by constructing
simplified models that extract the essential
features from problems without capturing all
their complexity.
 How Are Decisions Actually
Made in Organizations? (cont’d)
• How/Why problems are Identified
– Visibility over importance of problem
• Attention-catching, high profile problems
• Desire to “solve problems”
– Self-interest (if problem concerns decision maker)
• Alternative Development
– Satisficing: seeking the first alternative that solves
problem
– Engaging in incremental rather than unique problem
solving through successive limited comparison of
alternatives to the current alternative in effect
 Common Biases and Errors
• Overconfidence Bias
– Believing too much in our own ability to
make good decisions
Anchoring Bias
– Using early, first received information as
the basis for making subsequent
judgments
Confirmation Bias
– Using only the facts that support our
decision
 Common Biases and Errors
• Availability Bias
– Using information that is most readily at hand
• Recent and Vivid
• Representative Bias
– “Mixing apples with oranges”
– Assessing the likelihood of an occurrence by trying to match
it with a preexisting category using only the facts that
support our decision
• Winner’s Curse
– Highest bidder pays too much
– Likelihood of “winner’s curse” increases with the number of
people in auction
 Common Biases and Errors
• Escalation of Commitment
– In spite of new negative information,
commitment actually increases
Randomness Error
– Creating meaning out of random events
Hindsight Bias
– Looking back, once the outcome has
occurred, and believing that you accurately
predicted the outcome of an event
 Intuition
• Intuitive Decision Making
– An unconscious process created out of distilled
experience
• Conditions Favoring Intuitive Decision Making
– A high level of uncertainty exists
– There is little precedent to draw on
– Variables are less scientifically predictable
– “Facts” are limited
– Facts don’t clearly point the way
– Analytical data are of little use
– Several plausible alternative solutions exist
– Time is limited and pressing for the right decision
 Individual Differences in
Decision Making
 Personality
 Aspects of conscientiousness and escalation of
commitment
 Self Esteem High self serving bias
 Gender
 Women tend to analyze decisions more than men.
 Organizational Constraints on Decision Makers

• Performance Evaluation
– Evaluation criteria influence the choice of actions
• Reward Systems
– Decision makers make action choices that are favored
by the organization
• Formal Regulations
– Organizational rules and policies limit the alternative
choices of decision makers
• System-imposed Time Constraints
– Organizations require decisions by specific deadlines
• Historical Precedents
– Past decisions influence current decisions
Cultural Differences in Decision
Making
• Problems selected
• Time orientation
• Importance of logic and rationality
• Belief in the ability of people to solve
problems
• Preference for collective
decision making
 Ethics in Decision Making
• Ethical Decision Criteria
– Utilitarianism
• Seeking the greatest good for the greatest number
– Rights
• Respecting and protecting basic rights of
individuals such as whistleblowers
– Justice - Imposing and enforcing rules fairly and
impartially
 Ethics in Decision Making
• Ethics and National Culture
– There are no global ethical standards.
– The ethical principles of global organizations
that reflect and respect local cultural norms
are necessary for high standards and
consistent practices.
 Ways to Improve Decision
Making
1. Analyze the situation and adjust your decision
making style to fit the situation.
2. Be aware of biases and try to limit their impact.
3. Combine rational analysis with intuition to increase
decision-making effectiveness.
4. Don’t assume that your specific decision style is
appropriate to every situation.
5. Enhance personal creativity by looking for novel
solutions or seeing problems in new ways, and
using analogies.
 Toward Reducing Bias and Errors
• Focus on goals.
– Clear goals make decision making easier and help to
eliminate options inconsistent with your interests.
• Look for information that disconfirms beliefs.
– Overtly considering ways we could be wrong
challenges our tendencies to think we’re smarter than
we actually are.
• Don’t try to create meaning out of random events.
– Don’t attempt to create meaning out of coincidence.
• Increase your options.
– The number and diversity of alternatives generated
increase the chance of finding an outstanding one.
 Chapter
Chapter Check-up:
Check-up: Perception
Perception
It’s your little sister’s senior Prom night, and she notices that everyone is wearing the same
dress she has on! Which perceptual shortcut may be occurring?

Discuss with your neighbor what the answer would be if your sister came home and said “I just knew that
everyone would buy that dress!”• Escalation of commitment
• Representative bias
• Availability bias
• Hindsight bias
Chapter
Chapter Check-up:
Check-up: Perception
Perception

IfIf all
all of
of these
theseperceptual
perceptual shortcuts
shortcuts
happen
happenun-consciously,
un-consciously,how
howcan
canwe
we
keep
keepthe
thestereotypes
stereotypeswe
wehave
havefrom
from
interfering
interferingwith
withthe
theway
waywe
wework
workin
in
group
groupprojects?
projects?Identify
Identifytwo
twospecific
specific
things
thingsyou
youcould
coulddo
doto
tohelp
helpprevent
prevent
stereotypes
stereotypesfrom
from inhibiting
inhibitingeffective
effective
group
grouprelationships.
relationships.Discuss
Discusswith
withaa
neighbor.
neighbor.
Chapter
Chapter Check-up:
Check-up: Decision
Decision Making
Making

Michael has just discovered he is registered for two

classes at the same time and must make a decision about
which one to take this semester. He considers the
professor teaching this semester, the time of the class,
and the classes his friends are taking. He then considers
his options for when he can take each class again, as well
as the costs and benefits for taking each this semester
versus later next year. He then makes his decision.
Michael has just engaged in what?
 Chapter
Chapter Check-up:
Check-up: Decision
Decision Making
Making

In making his decision, Michael forgot to consider the

implications of the color of paint in the room where each
class was being offered. Given that room color can
influence mood, which can influence performance, why
didn’t Michael consider it?
Chapter
Chapter Check-up:
Check-up: Decision
Decision Making
Making

Michael engaged in the

rational decision making model,
and didn’t consider the paint color of
the rooms because he operates
under the confines of
bounded rationality.