Copyright ©2016 Pearson Education Limited.
Chapter 6
Perception and
Decision Processes
1-2
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After studying this chapter
you should be able to:
1. Define perception, and explain the factors that influence it.
2. Explain attribution theory, and describe the common
shortcuts used in judging others.
3. Explain the link between perception and decision making.
4. Contrast the rational model of decision making with
bounded rationality and intuition.
5. Identify the common decision biases or errors.
6. Explain how individual differences and organizational
constraints affect decision making.
7. Contrast the three ethical decision criteria.
8. Define creativity, and discuss the three-stage model of
creativity. 6-3
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Perception
Perception: A process by which
individuals organize and interpret
their sensory impressions in order to
give meaning to their environment
The world as it is perceived is the
world that is behaviorally important
6-4
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Factors Influencing Perception
6-5
Person Perception: Attribution Theory
Attribution Theory: Suggests that perceivers
try to “attribute” the observed behavior to a type
of cause:
Internal – behavior is believed to be under the
personal control of the individual
External – the person is forced into the
behavior by outside events/causes
6-6
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Determinants of Attribution
Distinctiveness – whether an individual
displays different behaviors in different
situations (the uniqueness of the act)
Consensus – does everyone who faces a
similar situation respond in the same way as
the individual did
Consistency – does the person respond the
same way over time
6-7
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Determination of Attribution
6-8
Attribution Errors
Fundamental attribution error:
Tendency to underestimate the influence of
external factors and overestimate that of
internal factors
Self-Serving Bias: Occurs when individuals
overestimate their own (internal) influence
on successes and overestimate the external
influences on their failures
The basic process of attribution applies
across cultures, but Western cultures tend
to be more individualist, while Asian
cultures are more group oriented
6-9
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Shortcuts Used in Judging Others
Selective Perception: A perceptual filtering
process based on interests, background, and attitude
Halo Effect: Drawing a general impression based
on a single characteristic
Contrast Effects: Our reaction is influenced by
others we have recently encountered (the context of
the observation)
Stereotyping: Judging someone on the basis of the
perception of the group to which they belong
6-10
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The Link Between Perception
and Decision Making
Decision making occurs as a reaction to
a perceived problem
Perception influences:
Awareness that a problem exists
The interpretation and evaluation of
information
Bias of analysis and conclusions
6-11
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Rational Decision-Making Model
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
This model is seldom actually used: it’s more
of a goal than a practical method
6-12
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Assumptions of the Model
Complete knowledge of the situation
All relevant options are known in an
unbiased manner
The decision maker seeks the highest
utility
6-13
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Bounded Rationality
The limited information-processing capability
of human beings makes it impossible to
assimilate and understand all the information
necessary to optimize
People seek solutions that are satisfactory and
sufficient, rather than optimal (they “satisfice”)
Bounded rationality is constructing simplified
models that extract the essential features from
problems without capturing all their
complexity
6-14
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Decision Making
in Bounded Rationality
Simpler than rational decision making, decision
making under bounded rationality is composed
of three steps:
1. Limited search for criteria and alternatives –
familiar criteria and easily found alternatives
2. Limited review of alternatives – focus on
alternatives, similar to those already in effect
3. Satisficing – selecting the first alternative that
is “good enough”
6-15
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Intuitive Decision Making
Intuitive decision making: A non-
conscious process created out of
distilled experience
Increases with experience
Can be a powerful complement to rational
analysis in decision making
6-16
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Common Biases and Errors
Overconfidence Bias
As managers and employees become more
knowledgeable about an issue, the less likely they are
to display overconfidence
Anchoring Bias
A tendency to fixate on initial information and fail to
adequately adjust for subsequent information
Confirmation Bias
Seeking out information that reaffirms our past
choices and discounting information that contradicts
past judgments
6-17
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Common Biases and Errors
Availability Bias
Basing judgments on information that is readily
available
Escalation of Commitment
Staying with a decision even when there is clear
evidence that it is wrong
Risk Aversion
Preferring a sure thing over a risky outcome
Hindsight Bias
Believing falsely that we could have predicted the
outcome of an event after that outcome is already
known
6-18
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Organizational Constraints
on Decision Making
Performance evaluations
Reward systems
Formal regulations
System-imposed time constraints
Historical precedents
6-19
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Ethical Frameworks
for Decision Making
Utilitarianism
Provide the greatest good for the greatest
number
Rights
Make decisions consistent with fundamental
liberties and privileges
Justice
Impose and enforce rules fairly and
impartially so that there is equal distribution
of benefits and costs 6-20
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Creativity in Organizations
Creativity: The ability to produce novel
and useful ideas
Helps people:
See problems others can’t see
Better understand the problem
Identify all viable alternatives
Identify alternatives that aren’t readily
apparent
6-21
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Three-Stage Model of Creativity
6-22
Creative Behavior
Steps:
1. Problem formulation: identify a
problem or opportunity that requires a
solution as yet unknown
2. Information gathering: possible
solutions incubate in an individual’s mind
3. Idea generation: develop possible
solutions from relevant information and
knowledge
4. Idea evaluation: evaluate potential
solutions and identify the best one
6-23
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Causes of Creative Behavior
Cause of creative behavior:
1. Creative potential
Expertise is the single most important
predictor of creative potential
2. Creative environment
Motivation
Rewards and recognition
6-24
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Creative Outcomes
Creative outcomes: ideas or
solutions judged to be novel and
useful by relevant stakeholders
6-25
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Implications for Managers
Behavior follows perception, so to influence
employee behavior at work, assess how employees
perceive their work.
Make better decisions by recognizing perceptual
biases and decision-making errors we tend to
commit.
Adjust your decision-making approach to the
national culture you’re operating in and to the
criteria your organization values.
Combine rational analysis with intuition.
Try to enhance your creativity.
6-26
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Keep in Mind…
1. People have inherent biases in perception and
decision making
Understanding those biases allows for better
prediction of behavior
2. Biases can be helpful
Managers must determine when the bias may
be counterproductive
3. Creativity aids in decision making
Helps to appraise, understand, and identify
problems
6-27
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Summary
1. Defined perception and explained the factors that influence
it.
2. Explained attribution theory, and described the common
shortcuts used in judging others.
3. Explained the link between perception and decision making.
4. Contrasted the rational model of decision making with
bounded rationality and intuition.
5. Identified the common decision biases or errors.
6. Explained how individual differences and organizational
constraints affect decision making.
7. Contrasted the three ethical decision criteria.
8. Defined creativity and discussed the three-stage model of
creativity.
6-28
Copyright ©2016 Pearson Education Limited.
