Perception and individual decision making

by
Mr. Tšo Sechaba
WELCOME
TO
Perception & individual decision
making session
 Objectives
• 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 decision-making process.
5. Outline the six steps in the rational decision-making model.
 Objectives cont.
6. Describe the action of a boundedly rational decision maker.
7. Identify the conditions in which individuals are most likely to
use intuition in decision making.
8. Describe four styles of decision making.
9. Define heuristics and explain how they bias decisions.
10.Contrast the three ethical decision criteria.
 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.
 People’s behavior is based on their perception of what reality is, not
on reality itself.
 The world as it is perceived is the world that is behaviorally
important.
Factors That Influence Perception
 Factors That Influence Perception cont.
• Factors in the perceiver
– E.g if you expect police officers to be authoritative, young people to be lazy, you may perceive
them as such regardless of their actual traits.
• Factors in the target
– Characteristics of the target being observed can affect what is perceived.
– E.g women, people of colour or members of any other group that has clearly distinguishable
characteristics in terms of features or colour are often perceived as alike in other, unrelated
characteristics as well.
• Factors in the situation
– The time at which an object or event is seen can influence attention, as can location, light, heat
or any number of situational factors.
– E.g I may not notice a 22-year-old female in an evening gown and heavy make-up at a nightclub
on Saturday night. Yet that same woman so attired for my Wednesday OB class would certainly
catch my attention and that of the rest of the class.
 Person Perception: Making Judgments About Others
• Attribution theory
– When individuals observe behaviour, they attempt to determine
whether it is internally or externally caused.
– That determination, however, depends largely on three factors; (1)
distinctiveness, (2) consensus and (3) consistency.
– Internally caused behaviour are those that are believed to be under
the personal control of the individual.
– Externally caused behaviour is seen as resulting from outside causes,
that is, a the person is seen as having forced into the behaviour by
the situation.
• Distinctiveness: shows different behaviors in different
situations.
• Consensus: response is the same as others to same situation.
• Consistency: responds in the same way over time.
Attribution Theory
 Errors and Biases in Attributions
• Two errors associated with attribution theory
1. Fundamental attribution error
– The tendency to underestimate the influence of external factors and
overestimate the influence of internal factors when making
judgement about the behaviour of others.
2. Self-serving bias
– The tendency for individuals to attribute their own successes to
internal factors while putting the blame for failures on external
factors
 Frequently Used Shortcuts in Judging Others
• Selective perception
– People selectively interpret what they see on the basis of their interests,
background, experience and attitudes.
• Halo effect
– Drawing a general impression about an individual on the basis of a
single characteristic.
• Contrast effects
– Evaluation of a person’s characteristics that are affected by comparisons
with other people recently encountered who rank higher or lower on
the same characteristics.
Frequently Used Shortcuts in Judging Others cont.
• Projection
– Attributing one’s own characteristics to other people.
• Stereotyping
– Judging someone on the basis of one’s perception of the group to
which that person belongs.
 Specific Applications in Organizations
• Employment Interview
– Perceptual biases affect the accuracy of interviewers’ judgments of applicants.
• Performance Expectations
– Self-fulfilling prophecy (pygmalion effect): The lower or higher performance of
employees reflects preconceived leader expectations about employee
capabilities.
• Performance Evaluations
– Appraisals are subjective perceptions of performance.
• Employee Effort
– Assessment of individual effort is a subjective judgment subject to perceptual
distortion and bias.
The Link Between Perceptions and Individual Decision Making

Problem
A discrepancy between
some current state of Perceptions
Perceptions
affairs and some desired of
ofthe
the
state decision
decision
maker
maker

Decisions
The choices made from
among two or more
alternatives. Outcomes
 Steps in the Rational Decision-Making Model
1. Define the problem
– This is the first step in which a problem exist when there is a discrepancy
between an existing and a desired state of affairs.
– E.g if you calculate your monthly expenses and find you are spending M1000
more than you allocated in your budget, you have defined a problem.
2. Identify the decision criteria
– In this step, the decision maker determines what is relevant in making the
decision.
– This step brings the decision maker’s interests, values and similar personal
preferences into the process
Steps in the Rational Decision-Making Model cont.
3. Allocate weights to the criteria
– The criteria identified are rarely all equal in importance.
So the third step requires the decision maker to weight the previously
identified criteria in order of to give them the correct priority in the
decision.
4. Develop the alternatives
– The fourth step requires the decision maker to generate possible
alternatives that could succeed in resolving the problem.
– No attempt is made in this step to appraise these alternatives, only to
list them.
Steps in the Rational Decision-Making Model cont.
5. Evaluate the alternatives
– Once the alternatives have been generated, the decision maker must critically
analyse and evaluate each one.
– This is done by rating each alternative on each criterion.
– The strengths and weaknesses of each alternative become evident as they are
compared with the criteria and weights established in the second and third
steps.
6. Select the best alternative
– The final step requires selecting the best alternative by computing the optimal
decision.
– This is done by evaluating each alternative against the weighted criteria and
selecting the alternative with the highest total score.
 Assumptions of the Rational Decision-Making Model
• Rational decision-making model
– A decision-making model that describes how individuals should
behave in order to maximize some outcome.
1. Problem clarity
– The problem is clear and unambiguous.
– The decision maker is assumed to have complete information regarding
the decision situation.
 Assumptions of the Rational Decision-Making Model cont.
2. Known options
– Decision maker can identify all the relevant criteria and can list
all the viable alternatives.
– The decision maker is aware of all the possible consequences
of each alternative.
3. Clear preferences
– Rationality assumes that the criteria and alternatives can be
ranked and weighted to reflect their importance.
 Assumptions of the Rational Decision-Making Model cont.
4. Constant preferences
– It is assumed that specific decision criteria are constant and that the
weights assigned to them are stable over time.
5. No time or cost constraints
– The rational decision maker can obtain full information about criteria
and alternatives because it is assumed that there are no time or cost
constraints.
6. Maximum payoff
– The rational decision maker will choose the alternative that yields
the highest perceived value.
 Improving creativity in decision making
• The rational decision maker needs creativity.
• Creativity
– The ability to produce novel and useful ideas.
– These are ideas that are different from what’s been done before but
that are also appropriate to the problem or opportunity presented.
• Why is creativity important to decision making?
– It allows the decision maker to more fully appraise and understand
the problem, including seeing problems others cannot see.
 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.
 The Three Components of Creativity cont.
• What can individuals and organizations do to stimulate
employee creativity?
– Best answer lies in the three-component model of creativity.
– Expertise
• it is the foundation for all creative work.
• The potential for creativity is enhanced when individuals have abilities,
knowledge, proficiencies and similar expertise in their field of endeavour.
 The Three Components of Creativity cont
• Creative-thinking skills
– This encompasses personality characteristics associated with
creativity, the ability to use analogies, as well as the talent to see the
familiar in a different light.
• Intrinsic task motivation
– This is the desire to work on something because it is interesting,
involving, exciting, satisfying or personally challenging.
How Are Decisions Actually Made in Organizations
• Bounded rationality
– Individuals make decisions by constructing simplified models that
extract the essential features from problems without capturing all
their complexity.

• Intuitive decision making

– An unconscious process created out of distilled experience.
 How Are Decisions Actually Made in Organizations (cont.)
• How/Why problems are identified
– Visibility over importance of problem
• Attention-catching, high profile problems
• Desire to “solve problems”
– Self-interest (if problem concerns decision maker)
• Alternative Development
– Satisficing: seeking the first alternative that solves problem.
– Engaging in incremental rather than unique problem solving through
successive limited comparison of alternatives to the current
alternative in effect.
Organizational Constraints on Decision Makers
• Performance Evaluation
– Evaluation criteria influence the choice of actions.
• Reward Systems
– Decision makers make action choices that are favored by the organization.
• Formal Regulations
– Organizational rules and policies limit the alternative choices of decision
makers.
• System-imposed Time Constraints
– Organizations require decisions by specific deadlines.
• Historical Precedents
– Past decisions influence current decisions.
THANK YOU

Questions?