Ob 251 Lecture 6 Perception and Individual Decision Making For Students1

ORGANIZATIONAL BEHAVIOUR
OB 251
By: Dr. Venus Ricablanca
Chapter Learning Objectives
After studying this chapter, you should be able to:

✓ Define perception and explain the factors that influence it.
✓ Explain attribute theory and list the three determinants of
attribution.
✓ Identify the shortcuts individuals use in making judgments
about others.
✓ Explain the link between perception and decision making.
✓ Apply the rational model of decision making and contrast it with
bounded rationality and intuition.
✓ List and explain the common decision biases or errors.
✓ Explain how individual differences and organizational
constraints affect decision making.
✓ Contrast the three ethical decision criteria.
✓ Define creativity and discuss the three-component model of
creativity.
What is Perception?
✓A process by which individuals organize and

interpret their sensory impressions in order to give
meaning to their environment.
✓People’s behavior is based on their perception of what

reality is, not on reality itself.
✓The world as it is perceived is the world that is

behaviorally important.
Factors that Influence Perception
Prepared by: DR. VENUS

Attribution Theory: Judging Others
Our perception and judgment of others is significantly influenced by our

assumptions of the other person’s internal state.
✓ When individuals observe behavior, they attempt to determine
whether it is internally or externally caused.
1. Internal causes are under that person’s control
2. External causes are not under the person’s control
Causation judged through:
1. Distinctiveness
Shows different behaviors in different situations
2. Consensus
Response is the same as others to same situation
3. Consistency
Responds in the same way over time
Elements of 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
We blame people first, not the situation
Self-Serving Bias
The tendency for individuals to attribute their own
successes to internal factors while putting the blame for
failures on external factors
It is “our” success but “their” failure
Frequently Used Shortcuts in Judging Others
Selective Perception
People selectively interpret what they see on the basis of their
interests, background, experience, and attitudes
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
Another Shortcut: Stereotyping
Judging someone on the basis of one’s perception of the group to

which that person belongs – a prevalent and often useful, if not
always accurate, generalization
Profiling
A form of stereotyping in which members of a group are
singled out for intense scrutiny based on a single, often
racial, trait.
6-9
Specific Shortcut Applications in Organizations
Employment Interview
Perceptual biases of raters affect the accuracy of
interviewers’ judgments of applicants
Formed in a single glance – 1/10 of a second!
Performance Expectations
Self-fulfilling prophecy (Pygmalion effect): The lower or
higher performance of employees reflects preconceived
leader expectations about employee capabilities
Performance Evaluations
Appraisals are often the subjective (judgmental) perceptions
of appraisers of another employee’s job performance
Critical impact on employees
Perceptions and Individual Decision Making
Problem
A perceived discrepancy between the current state of
affairs and a desired state
Decisions
Choices made from among alternatives developed from
data
Perception Linkage:
All elements of problem identification and the decision-
making process are influenced by perception.
Problems must be recognized
Data must be selected and evaluated
Decision-Making Models in Organizations
Rational Decision Making
The “perfect world” model: assumes complete
information, all options known, and maximum
payoff
Six-step decision-making process
Bounded Reality
The “real world” model: seeks satisfactory and
sufficient solutions from limited data and
alternatives
Intuition
A non-conscious process created from distilled
experience that results in quick decisions
Relies on holistic associations
Affectively charged – engaging the emotions
Common Biases and Errors in Decision Making
Overconfidence Bias
Believing too much in our own ability to make good
decisions – especially when outside of own expertise
Anchoring Bias
Using early, first received information as the basis for
making subsequent judgments
Confirmation Bias
Selecting and using only facts that support our decision
Availability Bias
Emphasizing information that is most readily at hand
Recent
Vivid
More Common Decision-Making Errors
Escalation of Commitment
Increasing commitment to a decision in spite of evidence
that it is wrong – especially if responsible for the decision!
Randomness Error
Creating meaning out of random events – superstitions
Winner’s Curse
Highest bidder pays too much due to value
overestimation
Likelihood increases with the number of people in
auction
Hindsight Bias
After an outcome is already known, believing it could
have been accurately predicted beforehand
Individual Differences in Decision Making
✓ Personality
• Conscientiousness may effect escalation of
commitment
Achievement strivers are likely to increase
commitment
Dutiful people are less likely to have this
bias
• Self-Esteem
High self-esteem people are susceptible to
self-serving bias
✓ Gender
• Women analyze decisions more than
men – rumination
• Differences develop early
✓ Mental Ability
Organizational Constraints
✓ Performance Evaluation
• Managerial evaluation criteria influence actions
✓ Reward Systems
• Managers will make the decision with the greatest
personal payoff for them
✓ Formal Regulations
• Limit the alternative choices of decision makers
✓ System-Imposed Time Constraints
Restrict ability to gather or evaluate information
✓ Historical Precedents
• Past decisions influence current decisions
Ethics in Decision Making
Ethical Decision Criteria

Utilitarianism
Decisions made based solely on the outcome
Seeking the greatest good for the greatest number
Dominant method for businesspeople
Rights
Decisions consistent with fundamental liberties and
privileges
Respecting and protecting basic rights of
individuals such as whistleblowers
Justice
Imposing and enforcing rules fairly and impartially
Equitable distribution of benefits and costs
Ethical Decision-Making Criteria Assessed
Utilitarianism
Pro: Promotes efficiency and productivity
Con: Can ignore individual rights, especially minorities
Rights
Pro: Protects individuals from harm; preserves rights
Con: Creates an overly legalistic work environment
Justice
Pro: Protects the interests of weaker members
Con: Encourages a sense of entitlement
Improving Creativity in Decision Making
✓ Creativity
The ability to produce novel and useful ideas
✓ Who has the greatest creative potential?
Those who score high in Openness to Experience
People who are intelligent, independent, self-
confident, risk-taking, have an internal locus of
control, tolerant of ambiguity, low need for structure,
and who persevere in the face of frustration
The Three Component Model of Creativity
Proposition that individual
creativity results from a mixture
of three components
✓ Expertise is the foundation Intrinsic

✓ Creative-Thinking Skills are Task Expertise
Motivation
the personality
characteristics associated
with creativity
✓ Intrinsic Task Motivation is Creative-
the desire to do the job Thinking Skills
because of its characteristics
Global Implications
Attributions
There are cultural differences in the ways people
attribute cause to observed behavior
Decision Making
No research on the topic: assumption of “no difference”
Based on our awareness of cultural differences in traits
that affect decision making, this assumption is suspect
Ethics
No global ethical standards exist
Asian countries tend not to see ethical issues in “black
and white” but as shades of gray
Global companies need global standards for managers
Summary and Managerial Implications
✓ Perception:
People act based on how they view their world
What exists is not as important as what is believed
Managers must also manage perception
✓ Individual Decision Making

Most use bounded rationality: they satisfice
Combine traditional methods with intuition and
creativity for better decisions
Analyze the situation and adjust to culture and
organizational reward criteria
Be aware of, and minimize, biases
Summary and Managerial Implications
Perception:
People act based on how they view their world
What exists is not as important as what is believed
Managers must also manage perception
Individual Decision Making

Most use bounded rationality: they satisfice
Combine traditional methods with intuition and
creativity for better decisions
Analyze the situation and adjust to culture and
organizational reward criteria
Be aware of, and minimize, biases

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ORGANIZATIONAL BEHAVIOUR

After studying this chapter, you should be able to:

✓A process by which individuals organize and

✓People’s behavior is based on their perception of what

✓The world as it is perceived is the world that is

Prepared by: DR. VENUS

Our perception and judgment of others is significantly influenced by our

Fundamental Attribution Error

Judging someone on the basis of one’s perception of the group to

Ethical Decision Criteria

✓ Expertise is the foundation Intrinsic

✓ Individual Decision Making

Individual Decision Making

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