Chapter SIX Perception and Individual Decision Making

What is the perceptual process?Perception.The process by which people select, organize, interpret, retrieve, and respond to information.

Perceptual information is gathered from:Sight.Hearing.Touch. Taste. Smell.*

Person Perception: Making Judgments About OthersDistinctiveness: shows different behaviors in different situations.Consensus: response is the same as others to same situation.Consistency: responds in the same way over time.

Errors and Biases in Attributions

Errors and Biases in Attributions (contd)

Common shortcuts in judging othersSelective PerceptionHalo effectStereo typingContrast effect

Common Shortcuts in Judging Others

Common Shortcuts in Judging Others

Common Shortcuts in Judging Others

Specific Applications of shortcuts in OrganizationsEmployment InterviewPerceptual biases affect the accuracy of interviewers judgments of applicants.Performance ExpectationsSelf-fulfilling prediction (Pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities.Performance EvaluationsAppraisals are subjective perceptions of performance.

The Link Between Perceptions and Individual Decision MakingPerceptions of the decision makerOutcomes

Decision Making in OrganizatationsModel AssumptionsProblem clarityKnown optionsClear preferencesConstant preferencesNo time or cost constraintsMaximum payoffRational Decision- Making ModelDescribes how individuals should behave in order to maximize some outcome.

Common Bias and Errors in Decision MakingOverconfidence BiasBelieving too much in our own decision competencies.Anchoring BiasFixating on early, first received information.Confirmation BiasUsing only the facts that support our decision.Availability BiasUsing information that is most readily at hand.Representative BiasAssessing the likelihood of an occurrence by trying to match it with a preexisting category.

Common Bias and Errors in Decision MakingEscalation of commitmentAn increased commitment to a previous decision in spite of negative information.Randomness ErrorThe tendency of individuals to believe that they can predict the outcome of random eventsRisk Aversion:The tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier outcome might have a higher expected payoff.Hindsight BiasThe tendency to believe falsely, after an outcome of an event is actually known, that one would have accurately predicted that outcome

Individual Differences on Decision MakingPersonalityGenderMental AbilityCultural Differences

Organizational Constraints on Decision MakersPerformance EvaluationEvaluation criteria influence the choice of actions.Reward SystemsDecision makers make action choices that are favored by the organization.Formal RegulationsOrganizational rules and policies limit the alternative choices of decision makers.System-imposed Time ConstraintsOrganizations require decisions by specific deadlines.Historical PrecedentsPast decisions influence current decisions.*

Ethics in Decision Making

Ethical Decision CriteriaUtilitarianismDecisions made based solely on the outcomeSeeking the greatest good for the greatest numberDominant method for businesspeopleRightsDecisions consistent with fundamental liberties and privilegesRespecting and protecting basic rights of individuals such as whistleblowersJusticeImposing and enforcing rules fairly and impartiallyEquitable distribution of benefits and costs

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Improving Creativity in Decision Making*CreativityThe ability to produce novel and useful ideas.Three-Component Model of CreativityProposition 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.

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