Perception and Individual

Decision Making
Perception
A process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment.
Attribution Theory
• People judge differently based on the meaning we attribute to a behavior

• Three factors: (a) distinctiveness, (b) consensus, and (c) consistency

• Fundamental attribution error: tendency to underestimate the influence of

external factors and overestimate the influence of internal factors in
decision making

• Self-serving error: tendency to attribute their own successes to internal

factors and own failures to external factors
Common shortcuts in judging others
• Selective perception
Halo effect
Contrast effect
Stereotyping
Specific applications of shortcuts in
organizations
• Employment interview

• Performance expectations
• Self-fulfilling prophecy

• Performance evaluation
Decision making in organizations
• Rational decision making

• Bounded rationality

• Intuitive decision making

Common biases and errors in decision making
• Overconfidence bias
• Anchoring bias
• Confirmation bias
• Availability bias
• Escalation of commitment
• Randomness error
• Risk aversion
• Hindsight bias
Influences on Decision Making
• Individual differences
• Personality

• Gender

• Mental Ability

• Cultural Differences
Organizational Constraints
• Performance evaluation

• Reward system

• Formal regulations
Ethics in decision making
• Utilitarianism

• Providing fair and impartial justice

• Fundamental liberties and privileges

• Whistle-blowers

• Behavioral ethics

• Broken window theory