Perception and Individual

Decision Making
 What Is Perception?
 Perception is the organization, identification, and
interpretation of sensory information in order to represent
and understand the presented information, or the
environment.
 A process by which individuals organize and interpret their
sensory impressions in order to give meaning to their
environment.
 Perception is a process by which people regard, analyze,
retrieve and react to any kind of information from the
environment.
 Because people’s
Why is behavior is based on their perception of
what reality is, NOT on reality itself
perception
important in
the study of
OB? What we perceive can
be substantially
different from
objective reality
The world as it is perceived is the
world that is behaviorally
important.
Factors that Influence Perception
Person Perception

Making Judgements
about others
 Attribution Theory
A theory which supposes that people attempt
to understand the behavior of others by
attributing feelings, beliefs, and intentions to
them.
It is an attempt to determine whether an
individual’s behavior is internally or externally
caused.
 Attribution Theory
Attribution theory suggests that when we observe
an individual’s behavior, we attempt to determine
whether it was internally or externally caused.
That determination depends largely on three
factors:
(1) distinctiveness
(2) consensus
(3) consistency
 Attribution Theory
 Distinctiveness: It refers to whether an individual
displays different behaviors in different situations

 If everyone who faces a similar situation responds in

the same way, we can say the behavior shows
consensus

 Consistency: Does the person respond the same way

over time?
Attribution Theory
 Errors or biases distorting 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.
• Self-serving Bias
The tendency for individuals to attribute their own
successes to internal factors and put the blame for
failures on external factors.
 Common shortcuts cum biases in Judging
others
i. Selective perception
The tendency to selectively interpret what one sees
on the basis of one’s interests, background,
experience and attitudes.
We see what we want to see!
you are more likely to notice cars like your own
ii. Halo effect
The tendency to draw a general impression about
an individual on the basis of a single characteristic.
 Common shortcuts cum biases in Judging
others
iii. Contrast effect
Evaluation of a person’s characteristics that is affected by
comparisons with other people recently encountered
who rank higher or lower on the same characteristics.
During interviews of candidates
marking of answer sheets
The challenge occurs when we generalize inaccurately or too much.
iv. Stereotyping
Judging someone on the basis of one’s perception of
the group to which that person belongs.
 specific applications of shortcuts in
organizations

i. Employment Interviews

ii. Performance Expectations

iii. Performance Evaluation

 The Link Between Perception
and Individual Decision Making

We Our
inte perception
e rpr
info valu et an decides
ma rmatio ate d
which data
kin
g d n whi is relevant
eci
sion le
s
Decision Making
Models/ Constructs of Decision Making

1. Rational Decision Making

2. Bounded Rationality
3. Intuition
 Rational Decision Making
o A decision-making model that describes how
individuals should behave in order to maximize
some outcome.

The rational decision making process is a cognitive

process which is made up of a logical step by step
process. In this process the emphasis is on thinking
things through and also on weighing the outcomes
and alternatives before arriving at a final decision.
 Rational Decision Making

Step 1: Identification of the Problem

Step 2: Identification of decision criteria
Step 3: Allocation of weights to criteria
Step 4: Development of Alternatives
Step 5: Analysis of Alternatives
Step 6: Selection of Alternative
Step 7: Implementation of the Alternatives
Step 8: Evaluation of the Decision Effectiveness
Step 1: Identification of the Problem
Step 2: Identification of decision criteria
Step 3: Allocation of weights to criteria
Step 4: Development of Alternatives
Step 4: Development of Alternatives
Step 5: Analysis of Alternatives
Step 6: Selection of Alternatives
Step 7: Implementation of the Alternatives
 Step 8: Evaluation of the Decision
Effectiveness
• Evaluating the outcome or result of the
decision to see whether the problem was resolved
• If problem still exists, manager needs to assess what
went wrong .
• Was the problem incorrectly defined? Were errors
made when evaluating alternatives? Was the right
alternative selected but poorly implemented?