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Chapter 5

Perception and Individual Decision Making

S T E P H E N P. R O B B I N S
E L E V E N T H 2005 Prentice Hall Inc. All rights reserved. E D I T I O N PowerPoint Presentation by Charlie Cook WWW.PRENHALL.COM/ROBBINS


After studying this chapter, you should be able to:

1. Explain how two people can see the same thing and interpret it differently.
2. List three determinants of attribution. 3. Describe how shortcuts can assist in or distort our judgment of others. 4. Explain how perception affects the decisionmaking process.

5. Outline the six steps in the rational decisionmaking model.

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O B J E C T I V E S (contd) LEARNING

After studying this chapter, you should be able to:

6. Describe the actions of a boundedly rational decision maker.
7. Define heuristics and explain how they bias decisions.

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What Is Perception, and Why Is It Important?

Perception A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Peoples behavior is based on their perception of what reality is, not on reality itself.

How do we perceive?


Factors That Influence Perception

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Attribution Theory
How people assign causes to events It involves perception about why things happen or why

people behave in the way they do.

It explains how we make judgments about people at work. We make an attribution when we perceive and describe

other peoples actions and try to discover why they behaved

in the way they did.
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Criteria for deciding whether behaviour is attributable to personal rather than external (situational) causes
Reference: Kelly, H.H. (1967) Attribution theory in social psychology, in (ed) D. Levine, Nebraska Symposium on Motivation, University of Nebraska Press, Lincoln, NB

That determination depends largely on four factors: 1. Distinctiveness: The behaviour can be distinguished from the behaviour of other people in similar situations.

2. Consensus: If other people agree that the behaviour is governed by some personal characteristic. (i.e., response is the same as others to same situation.)
3. Consistency over Time: Whether the behaviour is repeated (i.e., responds in the same way over time.) 4. Consistency over Modality (i.e., the manner in which things are done): Whether or not the behaviour is repeated in different situations. 57

Attribution Theory


Errors and Biases in Attributions

1. 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. Example: Why a sales manager is prone to attribute the poor performance of his sales representatives to laziness rather than to the innovative product line introduced by a competitor?
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Reference: Weiner, B. (1974) Achievement Motivation and Attribution Theory, General Learning Press, New Jersey

Attribution theory is concerned with the way in which people attribute success or failure to themselves. Research by Weiner (1974) and others have indicated that when people with high achievement needs have been successful they ascribe this to internal factors such as their ability and efforts. High achievers tend to attribute failure to lack of effort and not lack of ability. Low achievers tend not to link success with effort but to ascribe their failure to lack of ability.



Reference: Bandura, A. (1982) Self-efficacy mechanism in human agency, American Psychology, vol. 37, 122-47 Reference: Grandy, A. (2000) Emotion regulation in the workplace: a new way to conceptualize emotional behaviour, Journal of Occupational Psychology, vol. 5, 95-110

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The concept of self-efficacy was developed by Bandura

(1982) who defined it as how well one can execute

courses of action required to deal with prospective situations. It is concerned with an individuals self-belief

that s/he will be able to accomplish certain tasks, achieve

certain goals or learn certain things. Research by Grandy (2000) established that individuals high on self-efficacy tended to perform at a higher level.

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Locus of Control Attributions

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Locus of Control Attributions

What is Locus (place) of Control?

Extent to which an entity believes the current and anticipated circumstances, and its response to them (behavior), are within its control.

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The Link Between Perceptions and Individual Decision Making

Problem A perceived discrepancy between the current state of affairs and a desired state. Decisions Choices made from among alternatives developed from data perceived as relevant.

Perception of the decision maker

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Assumptions of the Rational Decision-Making Model

Rational DecisionMaking Model Describes how individuals should behave in order to maximize some outcome.

Model Assumptions
Problem clarity Known options Clear preferences Constant preferences No time or cost constraints Maximum payoff

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Steps in the 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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The Three Components of Creativity

Creativity The ability to produce novel and useful ideas. Three-Component Model of Creativity Proposition 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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Bounded Rationality (BR)

The extent to which people behave rationally is limited by their capacity to understand the complexities of the situation they are in and their emotional reactions to it. Your home assignment Q. What is the knowledge construct (or contribution) of the following literature towards BR? Miller, S.; Hickson, D.J.; and Wilson, D.C. (1999) Decision-making
in organizations, in (ed.) S. R. Clegg, C. Hardy and WR Nord, Managing Organizations: Current issues, Sage, London

Harrison, R. (2005) Learning and Development, 4th Edition, CIPD,

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Common Biases and Errors

Overconfidence Bias
Believing too much in our own decision competencies.

Anchoring Bias
Fixating on early, first received information.

Confirmation Bias
Using only the facts that support our decision.

Availability Bias
Using information that is most readily at hand.

Representative Bias
Assessing the likelihood of an occurrence by trying to match it with a preexisting category.

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Common Biases and Errors

Escalation of Commitment Increasing commitment to a previous decision in spite of negative information. Randomness Error Trying to create meaning out of random events by falling prey to a false sense of control or superstitions. Hindsight Bias (a.k.a. knew-it-all-along effect; creeping determinism) Hindsight = ability to see, after the event, what should have been done is the inclination to see events that have already occurred as being more predictable than they were before they took place. Falsely believing to have accurately predicted the outcome of an event, after that outcome is actually known.
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Schizophrenia [skit-suh-free-nee-uh, -freen-yuh] is an example of a disorder that directly affects the hindsight bias. The hindsight bias has a stronger effect on schizophrenic individuals compared to individuals from the general public. Also called Dementia Praecox [pree-koks]. a severe mental disorder characterized by some, but not necessarily all, of the following features: emotional blunting, intellectual deterioration, social isolation, disorganized speech and behavior, delusions, and hallucinations. A state characterized by the coexistence of contradictory or incompatible elements.
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Dementia Praecox


Schizophrenia (a.k.a. Dementia Praecox)

Schizophrenia is a psychological disorder, thought to be caused by imbalances in brain chemistry, which involves delusions and faulty perceptions of the world. People suffering from schizophrenia often hear voices in their head and have delusions of grandeur. It's not uncommon for people with schizophrenia to believe that they are Jesus or other prominent figures. There are several types of schizophrenia including disorganized, catatonic, paranoid, undifferentiated, and residual. See also:

Decision-Style Model

Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.

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