Perception and

Individual Decision Making

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Pic
Pic 11

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Pic
Pic

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What
What Is
Is Perception,
Perception, and
and Why
Why Is
Is ItIt Important?
Important?
Perception
A process by which
individuals organize
and interpret their
sensory impressions
in order to give
meaning to their
environment.

Peoples
Peoplesbehavior
behavior isis
based
based on
on their
their
perception
perception of
of what
what
reality
reality is,
is, not
not on
on
reality
reality itself.
itself.
The
The world
world as
as itit isis
perceived
perceived isis the
the world
world
that
that isis behaviorally
behaviorally
important.
important.
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Factors
FactorsThat
That
Influence
Influence
Perception
Perception

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Person
Person Perception:
Perception: Making
Making Judgments
Judgments About
About
Others
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.
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Attribution
AttributionTheory
Theory
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57

Errors
Errors and
and Biases
Biases in
in Attributions
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.

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Errors
Errors and
and Biases
Biases in
in Attributions
Attributions (contd)
(contd)
Self-Serving Bias
The tendency for
individuals to attribute
their own successes to
internal factors while
putting the blame for
failures on external
factors.

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Frequently
Frequently Used
Used Shortcuts
Shortcuts in
in Judging
Judging Others
Others
Selective Perception
People selectively interpret what they see
on the basis of their interests, background,
experience, and attitudes.

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510

Frequently
Frequently Used
Used Shortcuts
Shortcuts in
in Judging
Judging Others
Others
Halo Effect
Drawing a general
impression about an
individual on the basis of
a single characteristic
Contrast Effects
Evaluation of a persons characteristics
that are affected by comparisons with
other people recently encountered who
rank higher or lower on the same
characteristics.
vks 2005 Prentice Hall Inc. All rights reserved.

511

Frequently
Frequently Used
Used Shortcuts
Shortcuts in
in Judging
Judging Others
Others
Projection

Stereotyping

Attributing ones
own characteristics
to other people.

Judging someone on the

basis of ones
perception of the group
to which that person
belongs.

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512

Specific
Specific Applications
Applications in
in Organizations
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 outtypically on the basis
of race or ethnicityfor intensive inquiry,
scrutinizing, or investigation.
vks 2005 Prentice Hall Inc. All rights reserved.

513

Specific
Specific Applications
Applications in
in Organizations
Organizations (contd)
(contd)
Performance Evaluations
Appraisals are often the subjective (judgmental)
perceptions of appraisers of another employees
job performance.

Employee Effort
Assessment of individual effort is a subjective
judgment subject to perceptual distortion and
bias.

vks 2005 Prentice Hall Inc. All rights reserved.

514

The
The Link
Link Between
Between Perceptions
Perceptions and
and Individual
Individual
Decision
Decision Making
Making
Problem
A perceived discrepancy
between the current state
of affairs and a desired
state.
Decisions
Choices made from
among alternatives
developed from data
perceived as relevant.

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Perception
Perception
of
ofthe
the
decision
decision
maker
maker

Outcomes
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Assumptions
Assumptions of
of the
the Rational
Rational Decision-Making
Decision-Making
Model
Model
Rational DecisionMaking Model
Describes how
individuals should
behave in order to
maximize some
outcome.

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Model
ModelAssumptions
Assumptions
Problem
Problemclarity
clarity

Known
Knownoptions
options
Clear
Clearpreferences
preferences

Constant
Constant
preferences
preferences
No
Notime
timeor
orcost
cost
constraints
constraints
Maximum
Maximumpayoff
payoff
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Steps
Steps in
in the
the Rational
Rational Decision-Making
Decision-Making Model
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.

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517

The
The Three
Three Components
Components of
of Creativity
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.

vks 2005 Prentice Hall Inc. All rights reserved.

518

How
HowAre
Are Decisions
Decisions Actually
Actually Made
Made in
in
Organizations
Organizations
Bounded Rationality
Individuals make decisions by
constructing simplified models that
extract the essential features from
problems without capturing all their
complexity.

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519

How
HowAre
Are Decisions
Decisions Actually
Actually Made
Made in
in
Organizations
Organizations (contd)
(contd)
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.
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520

Common
Common Biases
Biases and
and Errors
Errors
Overconfidence Bias
Believing too much in our own decision
competencies.

Anchoring Bias
Fixating on early, first received information.

Confirmation Bias
Using only the facts that support our decision.

Availability Bias
Using information that is most readily at hand.

Representative Bias
Assessing the likelihood of an occurrence by
trying to match it with a preexisting category.
vks 2005 Prentice Hall Inc. All rights reserved.

521

Common
Common Biases
Biases and
and Errors
Errors
Escalation of Commitment
Increasing commitment to a previous decision in
spite of negative information.

Randomness Error
Trying to create meaning out of random events
by falling prey to a false sense of control or
superstitions.

Hindsight Bias
Falsely believing to have accurately predicted
the outcome of an event, after that outcome is
actually known.

vks 2005 Prentice Hall Inc. All rights reserved.

522

Intuition
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 dont clearly point the way
Analytical data are of little use
Several plausible alternative solutions exist
Time is limited and pressing for the right decision

vks 2005 Prentice Hall Inc. All rights reserved.

523

Decision-Style
Decision-Style Model
Model

Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision

Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.

vks 2005 Prentice Hall Inc. All rights reserved.

524

Organizational
Organizational Constraints
Constraints on
on Decision
Decision Makers
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.
vks 2005 Prentice Hall Inc. All rights reserved.

525

Cultural
Cultural Differences
Differences in
in Decision
Decision Making
Making

Problems selected
Time orientation
Importance of logic and rationality
Belief in the ability of people to solve problems
Preference for collect decision making

vks 2005 Prentice Hall Inc. All rights reserved.

526

Ethics
Ethics in
in Decision
Decision Making
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.

vks 2005 Prentice Hall Inc. All rights reserved.

527

Ethics
Ethics in
in Decision
Decision Making
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.

vks 2005 Prentice Hall Inc. All rights reserved.

528

Ways
Ways to
to Improve
Improve Decision
Decision Making
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. Dont 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.

vks 2005 Prentice Hall Inc. All rights reserved.

529

Toward
Toward Reducing
Reducing Bias
Bias and
and Errors
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 were smarter
than we actually are.

Dont try to create meaning out of random events.

Dont attempt to create meaning out of coincidence.

Increase your options.

The number and diversity of alternatives generated
increases the chance of finding an outstanding one.
Source: S.P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control
of Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), pp. 16468.

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