Essentials of Organizational Behavior

Fifteenth Edition, Global Edition

Chapter 6
Perception and Individual
Decision Making

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Learning Objectives
6.1 Explain the factors that influence perception.
6.2 Describe attribution theory.
6.3 Explain the link between perception and
decision making.
6.4 Contrast the rational model of decision making
with bounded rationality and intuition.
6.5 Explain how individual differences and
organizational constraints affect decision making.
6.6 Contrast the three ethical decision criteria.
6.7 Describe the three-stage model of creativity.
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What is Perception?
Learning Objective 6.1

• 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

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Factors that Influence Perception
• Factors the influence perception include
– The perceiver: your personal characteristics attitudes

– The target: characteristics of the target

– The context: situational factors

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Person Perception: Making Judgments
About Others
Learning Objective 6.2
• Person perceptions: perceptions we form about
each other
• Attribution Theory: an attempt to explain the
ways we judge people differently, depending on
the meaning we attribute to a behavior
• Internal and External Causation

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Distinctiveness, Consensus, and
Consistency
• Distinctiveness – whether an individual displays
different behaviors in different situations
• 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?

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Attribution Theory (Exhibit 6-1)

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Errors and Biases
• Fundamental attribution error:
– Tendency to underestimate the influence of external
factors and overestimate the influence of internal
factors
• Self-serving bias: occurs when individuals
overestimate their own (internal) influence on
successes and overestimate the external
influences on their failures
• Cultural differences exist

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Common Shortcuts in Judging Others
(1 of 2)

• Selective Perception: selectively interpret based

on interests, background, and attitude
• Halo and Horns Effects: drawing a general
impression based on a single characteristic

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Common Shortcuts in Judging Others
(2 of 2)

• 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
• Threat of technological unemployment: AI taking
over jobs

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The Link Between Perception and
Decision Making
Learning Objective 6.3
• Decision making occurs as a reaction to a
perceived problem
• Discrepancy between the current state and a desired
state
• Decisions: choices from among two or more
alternatives

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Decision Making in Organizations
Learning Objective 6.4

• Approaches to decision making

– Rational decision making
– Bounded rationality
– Intuition

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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

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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

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Intuition
• Intuitive decision making: a non-conscious
process created out of distilled experience
– Least rational decision-making model
– Affectively charged
– Can be a powerful complement to rational analysis in
decision making

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Common Biases and Errors in Decision
Making (1 of 2)
• Overconfidence Bias: a tendency to be
overconfident about our own abilities or the abilities of
others
• 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
• Availability Bias: basing judgments on readily
available information
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Common Biases and Errors in Decision
Making (2 of 2)
• Escalation of Commitment: staying with a
decision even when there is clear evidence that it
is wrong
• Randomness Error: our tendency to believe we
can predict the outcome of random events
• Risk Aversion: preferring a sure gain of a
moderate amount over a riskier outcome
• Hindsight Bias: believing falsely that we could
have predicted the outcome of an event after that
outcome is already known
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Influences on Decision Making: Individual
Differences & Organizational Constraints
Learning Objective 6.5
• Individual differences
• Personality
• Gender
• General mental ability
• Cultural differences

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Organizational Constraints on Decision
Making
• Performance evaluation systems
• Reward systems
• Formal regulations
• System-imposed time constraints
• Historical precedents
• Decision making in times of crisis

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Ethics in Decision Making (1 of 2)
Learning Objective 6.6

• Three Ethical Decision Criteria

• 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

Choosing between approaches !!!

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Ethics in Decision Making (2 of 2)
• Choosing between criteria
• Behavioral ethics
– Analyzing how people actually behave when
confronted with ethical dilemmas
• Lying
– Deadly to decision making

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Creativity and Innovation in Organizations
Learning Objective 6.7

• Creativity: the ability to produce novel and useful

ideas
• Helps people:
– See problems others can’t see
– Better fully understand problems

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Three-Stage Model of Creativity in
Organizations (Exhibit 6-4)

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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
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Causes of Creative Behavior
• Creative potential:
• Intelligence and creativity
• Personality and creativity
• Expertise and creativity
• Ethics and creativity
• Creative environment
– Motivation
– Rewards and recognition
– Jobs with clear innovative expectations

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Creative Outcomes (Innovation)
• Creative outcomes: ideas or solutions judged to
be novel and useful by relevant stakeholders

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Implications for Managers
• Behavior follows perception, so to influence behavior at
work, assess how people 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.

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Discussion Questions
• The characteristics of the target can affect what
we perceive. While some of these assumptions
we make about surface characteristics are
harmful, some can be beneficial to the target.
Discuss the role of artificial intelligence in this
process.
• Individuals are not skilled at detecting lying. And
since lying can be deadly to decision making, how
can organizations create environments that are
not conducive to lying?
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