Perception &

Individual Decision
Making
CHAPTER6
What is Perception
 Perception is a process by which we organize and interpret sensory
impressions in order to give meaning to our environment.

 For example, all employees in a firm may view it as a great place to work
—favorable working conditions, interesting job assignments, good pay,
excellent benefits, understanding and responsible management—but, as
most of us know, it’s very unusual to find agreement universal opinion
factors that Influence Perception
 Perceiver

Perceiver When you look at a target, your interpretation of what

you see is influenced by your personal characteristics—
attitudes, personality, motives, interests, past experiences, and
expectations.
In some ways, we hear what we want to hear and we see what
we want to see—not because it’s the truth, but because it
conforms to our thinking
 target The characteristics of the target also affect what we perceive.
Because we don’t look at targets in isolation, the relationship of a target to
its background influences perception, as does our tendency to group close
things and similar things together
context Context matters too. The time at which we see an object or
event can influence our attention, as can location, light, heat, or situational
factors
 Person Perception: making judgements
about others
Attribution Theory
Attribution theory tries to explain the ways we judge people differently, depending on the
meaning we attribute to a behavior
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
Internally caused behaviors are those an observer believes to be under the
personal behavioral control of another individual.
Externally caused behavior is what we imagine the situation forced the
individual to do.
 Distinctiveness refers to whether an individual displays different
behaviors in different situations. Is the employee who arrives late today
also one who regularly “blows off” other kinds of commitments?
 What we want to know is whether this behavior is unusual. If it is, we are
likely to give it an external attribution. If it’s not, we will probably judge
the behavior to be internal
 Consensus If everyone who faces a similar situation responds
in the same way

Consistency Does the person respond the same way

over time?
 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 in Judging others

selective perception The tendency to selectively

interpret what one sees on the basis of one’s interests,
background, experience, and attitudes
 Seeingwhat we want to see, we sometimes draw
unwarranted conclusions from an ambiguous situation.
 Halo effect The tendency to draw a general impression about
an individual on the basis of a single characteristic .

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

 Stereotyping Judging someone on the basis of one’s

perception of the group to which that person belongs.
specific applications of shortcuts in
organizations
employment Interview
 Research shows we form impressions of others within a tenth of a
second, based on our first glance.
 Most interviewers’ decisions change very little after the first 4 or 5
minutes of an interview
 Our individual intuition about a job candidate is not reliable in
predicting job performance, so collecting input from multiple
independent evaluators can be predictive
Performance expectations
People attempt to validate their perceptions of reality even when these perceptions are
faulty
 self-fulfilling prophecy/Pygmalion effect
A situation in which a person inaccurately perceives a second person, and the
resulting expectations cause the second person to behave in ways consistent with the
original perception.
If a manager expects big things from her people, they’re not likely to let her down.
Similarly, if she expects only minimal performance, they’ll likely meet those low
expectations. Expectations become reality.
Performance evaluations
An employee’s future is closely tied to his or her appraisal—
promotion, pay raises, and continuation of employment

Subjective evaluations, though often necessary, are

problematic because of the errors

Sometimes performance ratings say as much about the

evaluator as they do about the employee
 The Link Between Perception and
Individual Decision Making
 Decisions: Choices made from among two or more alternatives
 the way individuals make decisions and the quality of their choices
are largely influenced by their perceptions
 Decision making occurs as a reaction to a problem
Problem A discrepancy between the current state of affairs
and some desired state.
 One person’s problem is another person’s satisfactory state of
affairs
One manager may view her division’s 2 percent decline in
quarterly sales to be a serious problem requiring immediate
action on her part. Her counterpart in another division, who also
had a 2 percent sales decrease, might consider it quite acceptable.
Decision Making in Organizations
the rational model, Bounded rationality, and Intuition
 Rational Decision making
 Bounded rationality
A process of making decisions by constructing simplified models that extract
the essential features from problems without capturing all their complexity.

Many problems don’t have an optimal solution because they are too
complicated to fit the rational decision-making model, so people satisfice; they
seek solutions that are satisfactory and sufficient.

a satisficing choice—the first acceptable one we encounter—rather than an

optimal one
 Intuitive decision making occurs outside conscious thought; relies
on holistic associations, or links between disparate pieces of
information; is fast; and is affectively charged, meaning it engages
the emotions
 While intuition isn’t rational, it isn’t necessarily wrong. Nor does it
always contradict rational analysis; the two can complement each
other.
common Biases and errors in Decision making

 Overconfidence Bias We tend to be overconfident about our abilities and the abilities of
others; also, we are usually not aware of this bias.
 Anchoring bias is a tendency to fixate on initial information and fail to adequately adjust
for subsequent information
 Confirmation bias represents a case of selective perception: we seek out information that
reaffirms our past choices, and we discount information that contradicts them
 availability bias The tendency for people to base their judgments on information that
is readily available to the
More people fear flying more than driving in a car. But if flying on a commercial airline
were as dangerous as driving, the equivalent of two 747s filled to capacity would crash
every week, killing all aboard
 Escalation of commitment refers to our staying with a decision even if there is clear
evidence it’s wrong
Consider a friend who has been dating someone for several years. Although he admits things
aren’t going too well, he says he is still going to marry her. His justification: “I have a lot
invested in the relationship

randomness error The tendency of individuals to believe that they can predict the outcome of
random events
(“I never make important decisions on Friday the 13th”)
(Tiger Woods often wears a red shirt during a golf tournament’s final round because he won
many junior tournaments wearing red shirts)

Hindsight bias is the tendency to believe falsely, after the outcome is known, that we would
have accurately predicted it. When we have feedback on the outcome, we seem good at
concluding it was obvious.
 Influences on Decision Making:
Individual Differences and Organizational Constraints

Individual Differences
Personality
First, achievement-oriented people hate to fail, so they escalate their
commitment, hoping to forestall failure,.. they appear more
susceptible to hindsight bias
Dutiful people, however, are more inclined to do what they see as best
for the organization, so they are less likely to escalate their
commitment.
 People with high self-esteem use the self-serving bias to preserve the self perception.
They blame others for their failures while taking credit for successes
Gender
 When the situation isn’t stressful, decision making by men and women is about equal
in quality
 In stressful situations, it appears that men become more egocentric and make more
risky decisions,
 while women become more empathetic and their decision making improves
 Women spend more time than men analyzing the past, present, and future. They’re
more likely to overanalyze problems before making a decision and to. This can make
problems harder to solve, increase regret over past decisions, and increase depression
Organizational constraints

 Performance evaluation systems- not hearing any negative news

 reward systems- If the organization rewards risk aversion, managers are
more likely to make conservative decisions
 formal regulations- All but the smallest organizations create rules and
policies to program decisions and get individuals to act in the intended
manner
Ethics In Decision Making
 Three ethical decision criteria
1. Utilitaianism : A system in which decisions are made to provide the greatest good for the
greatest number.

2. to make decisions consistent with fundamental liberties and privileges. An emphasis on

rights in decision making means respecting and protecting the basic rights of individuals,
such as the right to privacy, free speech, and due process. This criterion protects whistle-
blowers

3. A third criterion is to impose and enforce rules fairly and impartially to ensure justice or an
equitable distribution of benefits and costs
 Creativity, Creative Decision Making,
and Innovation
 a three-stage model of creativity
 Creativity The ability to produce novel and useful ideas.
 Creative Behavior
1. problem formulation -involves identifying a problem or opportunity requiring a
solution that is as yet unknown.
2. information gathering -when possible solutions to a problem incubate in an
individual’s mind.
3. idea generation - involves developing possible solutions to a problem from relevant
information and knowledge.
4. idea evaluation -the evaluation of potential solutions to problems to identify the best
on
Causes of Creative Behavior
 creative Potential
 Intelligence and creativity
 Personality and Creativity
 Expertise and Creativity
 Ethics and Creativity
 creative environment
 most important is motivation. If you aren’t motivated to be creative, it is unlikely
you will be
 You may be wondering about the link between organizational resources and
creativity. While it is said that “necessity is the mother of invention,”
 Culture effect: individualism
 Leadership styles
 Creative Outcomes
 One study showed that most people have a bias against accepting
creative ideas because ideas create uncertainty. When people feel
uncertain, their ability to see any idea as creative is blocked

 We can define creative outcomes as ideas or solutions judged to be novel

and useful by relevant stakeholders. Novelty itself does not generate a
creative outcome if it isn’t useful. Thus, “off-the-wall” solutions are
creative only if they help solve the problem. The usefulness of the
solution might be self-evident (the iPad), or it might be considered
successful by only the stakeholders initially