Chapter 5

Perception and Individual Decision Making

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 Learning Objectives
Define perception and explain the factors that influence it.

Explain attribution theory and list the three determinants of attribution.

Identify the shortcuts of individuals use in making judgments about others.

Explain the link between perception and decision making.

Apply the rationale model of decision making and contrast it with bounded
rationality and intuition.

List and explain the common decision biases and errors.

Explain how individuals differences and organizational constraints affect decision

making.

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 Reality
What is Reality?

Objectivism VS Subjectivism

e.g. how do define personality characteristics of

your fellow?

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 What is Perception?

Our behavior is based on our perception of what reality, not

on reality itself

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Which line is greater in length????????
Is the left center circle bigger?
How many colors can you see?
 These experiments show how reality and 
perceptions are different some times. And we
rely on our perception of reality not on reality
itself.

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 What is Perception?

Perception

A process by which individuals organize and

interpret their sensory impressions in order to give
meaning to their environment

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How many Faces can you see?
What factors affect perception?

Factors in the perceiver

Attitudes
Motives
Interests
Experience
Expectations

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What factors affect perception?

Factors in the Target

Novelty
S
I
Motion
M Sounds
I

Si e
L
A
R z
I
T
Y
P roximit y
Background

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What factors affect perception?

Factors in the situation

Time
Work setting
Social setting

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 What factors affect perception?

Factors in the perceiver

Attitudes – Motives –Interests –
Experience - Expectations

Factors in the situation Factors in the target

Time – Work setting – Social Novelty – Motion – Sounds – Size
setting Perception – Background – Proximity -
Similarity

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Attribution Theory

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Person Perception: Making Judgments
About Others
Attribution Theory

An attempt to determine whether an individual’s behavior is internally or externally caused

The Attribution Process

Attribution of
Observation Interpretation
Cause

Distinctiveness
(High or Low)

Observation of Consensus Internal or External

Behavior (High or Low) causes
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Consistency
(High or Low)
 Person Perception: Making Judgments
About Others

Errors and Biases in Attributions

The tendency to underestimate the influence of external factors and

Fundamental overestimate the influence of internal factors when making judgments about
Attribution Error the behavior of others

We blame people first, not the situation

The tendency for individuals to attribute their own successes to internal

Self-Serving Bias factors while putting the blame for failures on external factors

It is “our” success but “their” failure

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 Person Perception: Making Judgments
About Others
Frequently Used Shortcuts in Judging Others

People selectively interpret what they see on the basis of their interests,
Selective Perception background, experience, and attitudes

Drawing a general impression about an individual on the basis of a single

Halo Effect characteristic

Evaluation of a person’s characteristics that are affected by comparisons with

Contrast Effects other people recently encountered who rank higher or lower on the same
characteristics

Judging someone on the basis of one’s perception of the group to which that
Stereotyping person belongs – a prevalent and often useful, if not always accurate,
generalization

A form of stereotyping in which members of a group are singled out for intense
Profiling scrutiny based on a single, often racial, trait
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 Person Perception: Making Judgments
About Others

Specific Applications of Shortcuts in Organizations

Perceptual biases of raters affect the accuracy of interviewers’ judgments of

Employment applicants.
Interviews Formed in a single glance – 1/10 of a second!

Self-fulfilling prophecy (Pygmalion effect): The lower or higher performance of

Performance employees reflects preconceived leader expectations about employee
Expectations capabilities

Appraisals are often the subjective (judgmental) perceptions of appraisers of

Performance another employee’s job performance
Evaluations Critical impact on employees.

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Pygmalion Effect

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 The Link Between Perception and
Individual Decision Making

A perceived discrepancy between the current state of affairs and a desired

Problem state

Decision Choices made from among alternatives developed from data

1 Problem Identification, 2. Information Search, 3.Developing Alternatives,

Decision Process 4. Setting Evaluation Criteria, 5. Evaluating Alternatives, 6. Selection

All elements of problem identification and the decision making process are
Perception Linkage influenced by perception

Problems must be recognized - Data must be selected and evaluated

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 Decision Making in Organizations

Decision Making Approaches

Rational Decision- The “perfect world” model: assumes complete information, all options known,
Making and maximum payoff

Six-step decision-making process

The “real world” model: seeks satisfactory and sufficient solutions from
Bounded Reality limited data and alternatives

A non-conscious process created from distilled experience that results in

Intuition quick decisions

Relies on holistic associations - Affectively charged “engaging the emotions”

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 Decision Making in Organizations

Common Biases and Errors in Decision Making

Believing too much in our own ability to make good decisions – especially
Overconfidence Bias when outside of own expertise

Using early, first received information as the basis for making subsequent
Anchoring Bias judgments

Confirmation Bias Selecting and using only facts that support our decision

Availability Bias Emphasizing information that is most readily at hand (Recent – Vivid)

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 Decision Making in Organizations

Common Biases and Errors in Decision Making

Increasing commitment to a decision in spite of evidence that it is wrong –

Escalation of especially if responsible for the decision!( continue with your commitment with
Commitment all resources)

Randomness Error Creating meaning out of random events - superstitions

Highest bidder pays too much due to value overestimation

Winner’s Curse Likelihood increases with the number of people in auction

After an outcome is already known, believing it could have been accurately

Hindsight Bias predicted beforehand

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 Decision Making in Organizations
Individual Differences

Personality Conscientiousness may effect escalation of commitment

Achievement strivers are likely to increase commitment

Dutiful people are less likely to have this bias

High self-esteem people are susceptible to self-serving bias

Gender Women analyze decisions more than men – rumination

Women are twice as likely to develop depression 29