MIMT 5020

Managerial Decision Making

Kin Fai Ellick Wong Ph.D.

Department of Management
The Hong Kong University of Science & Technology

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Preparing a self description
• Name:
• Student ID:
• Some self-introduction:
• Name: Dr. Kin Fai Ellick WONG ( 黃健輝 )
• Education: B.S.Sc, M.Phil., Ph. D. in
psychology (CUHK)
• Research interest: Managerial decision
making; Human judgment and decision
processes; Human attention and memory;
Language processing
A5 paper • Age? Hm… hm..
• Hobby: TV games, snooker, pop music
(e.g., Jay, Ivana, Sandy, YeeChing,Tat-
Ming), watching soccer, NBA

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 Where are we now?

Thinking, Judgment, Problem Solving

and Rationality

Specific Decision
Perception Biases

Probability Judgment Self-Affirmation

Learning to be non- Learning to be non-

rational rational

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Agenda: Perception

• Part 1: Seacorner Package

• Part 2: Common Perceptual Biases
• Part 3:Subliminal Perception

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Seacorner Package
Issue 1:Leaflet Design with Map

• The Background:
– In 2013 the Directors of Seacorner made two very important
decisions.
• First, they decided to relocate to a new office which was more
accessible to customers and employees, preferably within 10-mins
from MTR stations. After considering all other factors (e.g., rental rate,
directors preferences, and accessibility to other facilities such banks,
post offices, and office equipment supplies, etc.), they decided to move
their general office to San Po Kong ( 新 蒲 崗 ), an industrial area in
Kowloon East which is not far away from the Diamond Hill ( 鑽 石 山 )
MTR station (i.e., 7-10 mins walk).
• Second, they decided to make leaflets in order to promote the new
office. In particular, they wanted to let their customers know that the
new office is close to MTR exits. Here is the map of the new office
from Google Map:

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Seacorner Package
Issue 1:Leaflet Design with Map

• The Background:

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Seacorner Package
Issue 1:Leaflet Design with Map
• The Background:
– In the Board Meeting, the Directors made the following consensus
with respect to the design of the leaflet:
a. From the previous customer feedback, they knew that customers were not so
satisfied that the previous office was too far away from MTR Station. Therefore,
they all agreed that the primary goal of the leaflet was to let people know the
distance from MTR.
b. All Directors agreed that the leaflet should include a map showing specifically the
MTR location and Seacorner location.
c. All also agreed that the map should be based on Google Map, because they
expected that most customers were very familiar with the Google Map interface.

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Seacorner Package
Issue 1:Leaflet Design with Map
• However, the Directors had
a strong disagreement on
the orientation of the map.
One (Director WD)
maintained that the map
should be North-up, which
was the default of Google
Map and so most other
maps. This is the North-up
map:

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Seacorner Package
Issue 1:Leaflet Design with Map
• Another (Director SB)
suggested that people often
like to see their path as
either a horizontal line or a
vertical line. This Director
strongly argued that the map
should be rotated to be as:

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Seacorner Package
Issue 1:Leaflet Design with Map
• The Disagreement:
– Director WD believed that there was no big difference between
rotated and original versions of map because the absolute distance
on the map in the versions was identical. Director WD felt that
because he was the one initiated the idea of using North-up map,
others should respect him. He did not want to revise his mind
unless the alternative was highly reasonable. Director WD
therefore strongly asserted that the map had to be North-up

– Director SB, however, believed that the original map made no

sense because it created confusion to customers. She asked all
members “Do you know where is the north and where is the south
when you are walking from here to MTR station?”. All replied “No”.
She then laughed loudly in front of all members.

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Seacorner Package
Issue 1:Leaflet Design with Map
• Questions:
– Question 1:
a) Which one do you prefer? The rotated one or the original one? Why?
b) Why do you think that your preference will be more consistent with the
primary goal of developing this leaflet? Any evidence supporting your
reasons?

– Question 2:
a) If you are allowed to participate in this process of the map design, how
would you design the map?
b) Why do you think that your design will be more consistent with the primary
goal of developing this leaflet? Any evidence supporting your reasons?

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Agenda: Perception

• Part 1: Seacorner Package

• Part 2: Common Perceptual Biases
• Part 3:Subliminal Perception

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Sensation vs. Perception

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Perception

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Perception

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Perception
• Perceptual errors and biases

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Perception

• Perceptual errors and biases

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Perception

• Perceptual errors and biases

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Perception

• Perceptual errors and biases

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Perception

• Perceptual errors and biases

 Why impossible figures are “possible”?

• The rationality approach of human rationality is often

inconsistent with human perception

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Perception
• Perceptual errors and biases
 “T” illusion

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Perception

• Perceptual errors and biases

 Moon illusion

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Perception

• Perceptual errors and biases

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Perception

• Perceptual errors and biases

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Perception

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Perception

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Perception

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Perception

• Managerial implications
 These visual illusions are of relevant to data
presentation and figure perception

1998 1999 2000 2001 2002 2003 2004 2005

Division
100 90 100 90 110 110 120 125
A
Division
125 125 110 110 105 115 105 110
B

Performance of Divisions A and B from 1998-2005 in terms of sale

volumes

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Perception
• Managerial implications
140
Division A
120 Division B

100

80

60

40

20

0
1998 1999 2000 2001 2002 2003 2004 2005

Performance of Divisions A and B from 1998-2005 in terms of sale 31

volumes
Perception
140 Division A
Division B
120

100

80

60

40

20

0
1998 1999 2000 2001 2002 2003 2004 2005

Performance of Divisions A and B from 1998-2005 in terms of sale

volumes
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• Financial Graph Example

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• Financial Graph Example

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• Financial Graph Example

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1. Please have paper and pen/pencil ready in front of you
2. Then forget about the paper and pen/pencil. Focus on the
following task

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 Water
Moon
Name the RED word as quickly as possible

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Doctor
Radio

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Nurse
Gold

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 Clock
Book

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Park
Clock

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Park
Mail

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 Kitchen
Station

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 Earth
Disk

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 Color
Nose

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Nose
Student

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• Task 2:

 Write down all the words including both “red” and “green” on the
given paper

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Perception

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Perception

Do you see a musician or a girl's face?

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Perception

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Perception

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Perception

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Agenda: Perception

• Part 1: Seacorner Package

• Part 2: Common Perceptual Biases
• Part 3:Subliminal Perception

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Perception
• Subliminal perception?
 Presenting stimuli that are under physiological/subjective
threshold of awareness/consciousness
• E.g.:
Presenting/flashing “Drink Coca Cola” in 1/2000 sec (5ms)

• What effects will these stimuli have on behaviors?

An example from an ad of the 2000 US president election

» Bush vs. Gore

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Perception
• Subliminal perception?
 The most well-known (controversial) report of
subliminal perception
• 1957, James Vicary, a market researcher
– “Eat Popcorn” “Drink Coca-Cola”
– Embedded in a movie, flashed for 3/1000 of a second once every
five seconds
– Sales of Popcorn: 57.7% increased
– Sales of Coca-cola: 18.1% increased

• 1962, in an interview…
– He admitted that the findings were indeed fabrication

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Perception

• Subliminal perception?
 The idea of subliminal perception in advertising became even more “popular” in 1970s after
Wilson Bryan Key’s book “Subliminal Seduction and Media Sexploitation”

• He claimed that many ads embedded “sex” related information

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Perception
• Subliminal perception?

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Perception
• Subliminal perception?

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Perception
• Subliminal perception?

BUT, there is NO evidence that this has

impacts on consumer behaviors….

If it has impacts, they may be NEGATIVE

impacts

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Perception
• Subliminal perception?
 Scientific Facts:

• Positive semantic priming:

– Doctor (50 ms)  Nurse  550 ms

– Flower (50 ms)  Nurse  600 ms

– While semantic priming is very robust, it is also very short-

lived

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Doctor
Radio

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Nurse
Gold

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Perception
• Subliminal perception?
 Scientific Facts:

• Negative priming:
– Ignored (Park) Attended (Park)  650 ms
– Non-ignored (Any word)  Attended (Park) 600 ms
– Negative priming could be quite long-lasting

• Semantic negative priming

– Ignored (Park) Attended (Garden)  650 ms
– Non-ignored (Any word)  Attended (Garden) 600 ms

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Perception

Park
Clock

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Perception

Garden
Mail

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Perception
• Subliminal perception?
 Managerial Implications

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Perception

https://www.scmp.com/article/
655407/flying-dragon-logo-has-
failed-take

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Agenda: Perception

• Part 1: Seacorner Package

• Part 2: Common Perceptual Biases
• Part 3:Subliminal Perception

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Seacorner Package
Issue 1:Leaflet Design with Map
• Suggestion

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Seacorner Package
Issue 1:Leaflet Design with Map
• Evidence for Suggestion:
– The application of what we have know about T-illusion, or more specifically
vertical-horizontal illusion.
– See the following Experimental results from Mikellidou & Thompson
(2013,Experiment 3)

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Seacorner Package
Issue 1:Leaflet Design with Map
• Evidence for Suggestion:
– Additional Information:
• From: Wolfe, Maloney, & Tse (2005).

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• Take home assignment

– Do Seacorner Package MIMT 5020 ISSUE 2

• (less than 24-lines, 12 Times New Roman)

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Background:
– Due to some historical reasons, Seacorner Beauty identified
Mountain-square (a fake name in order to protect privacy) as her
chief competitor. While I am not going to explain these reasons in
details here, the history will naturally emerge when students read
more of the subsequent issues. Simply speaking, the relationship
between Seacorner Beauty and Mounter-square is similar to
Tottenham vs. Arsenal in Premier League, Barcelona vs. Real
Madrid in LIGA BBVA, Allan Tam vs. Leslie Cheung in Canton pop,
SEGA vs. Nintendo in TV game console, Batman vs. Joker in
Gotham, and may other pairs.

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Background:
– Unfortunately, Seacorner Beauty has been inferior to Mountain-
square in some dimensions (of course more superior in other
dimensions). Although the difference is not huge and is not so
obvious, lagging behind just by 1 cm is not equal to no difference.
Although Seacorner Beauty does not want to admit, she realistically
accepts the fact that they have to work hard to minimize the gaps in
these dimensions. Although rationally Seacorner Beauty has to just
focus on the absolute profits she can make each year, the emotional
involvement of comparing with Mountain-square has led Seacorner
Beauty sometimes forget what is her most important objective of the
business. Perhaps the most impressive slogan in Seacorner Beauty
is “If we lose money in this year, it is still a winning year if our loss is
smaller than Mountain-square’s.”

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Background:
– From the above description, you may now know Seacorner Beauty
really cares her major competitor. Accordingly, Seacorner Beauty is
very proactively tracking the performance indexes between the two
companies. Of course, Seacorner Beauty could not know the most
important performance data from Mountain-square. However, there
were data transparent enough for Seacorner Beauty to make
reasonable inference and comparison: that is the number of
feedback score in ebay:

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Background:

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?
• The Background:
– The two Assistant Directors of Seacorner Beauty casually tracked
these data independently. In a board meeting in 2012 Fall,
something very interesting happened. Before the meeting, the
Assistant Director of Sales and Marketing (ADSM) collected the
feedback score data from the last few months. The data showed the
following:
(Part of the data is modified in order to fit the teaching purposes.)

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?
• The Background:
– The ADSM double checked and was sure that the information was
accurate. Thus, she interpreted that the findings from this graph
indicates two very good progresses of Seacorner Beauty:
• The feedback score kept increasing, indicating the business of Seacorner Beauty
was growing well.
• The difference between Seacorner Beauty and Mountain-square was diminishing
over time.

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Disagreement
– In the 2012 Fall meeting, the first item of discussion was the
Feedback Score issue. The ADSM kicked off the discussion.
Immediately, she proposed that before the formal discussion, all the
board members should celebrate the very satisfactory progress in
the recent feedback scores. She then displayed the above chart, and
put two bottles of champagne on the meeting table.

– The Director of Seacorner Beauty (DSB) and the Assistant Director

of Purchase (ADP) were highly surprised with what ADSM was
doing. The ADP stopped the ADSM with the following wording:
• “What happened? Celebrate? Why?”

– The ADSM replied with a confident smile:

• “We celebrate our increasing feedback scores, and more importantly, we are
getting closer to Mountain-square!”
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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Disagreement
– The DSB and the ADP were very puzzled. The ADP clarified
– “Is you information accurate? What you described is not consistent
with the information I obtained. Yes, our feedback score is really get
increasing. However, we are not getting closer to Mountain-square.
In contrast, we are actually moving slight away from us.”

– The ADSM kept smiling and showed the graph to the DSB
and the ADP, saying:
• “This is what we did in the last four months. You see, we are actually getting
closer to Mountain-square.

– The DSB supported the ADP:

• “I did the information search independently. I got the information consistent with
the ADP. We are actually moving slight away from Mountain-square. I am afraid
that you have to take away the bottles and the champagne. It’s not the time we
can celebrate!”
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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Disagreement
– After cleaning all the stuff, and toward the end of the board meeting,
the DSB added:
• “I expect that the information put on this table must be accurate and precise. It’s
wasting our time by putting sloppy information that has not yet been double
checked.

– The ADSM perceived that the added words directly points to her
feedback score information. She felt very disappointed and upset.
She was the only one who showed that data. But the two other
directors rejected the data. She questioned that in fact the data by
the ADP and the DSB were inaccurate. She attributed that it is a
political issue, perceiving that the two Directors did not like her and
so jointly made her unhappy.

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Seacorner Package Issue 2:
Are We Getting Closer to the Major Competitor?

• The Assignment:
– Question 1:
• The objective fact is that later the ADSM discovered that her
data and the data from the ADP and DSB are all accurate. Then,
why the same data will lead to the disagreement with opposite
understanding?
• Given your speculation in 1a, what suggestions will you propose
in order to avoid the same disagreement happening again?
• (less than 24-lines, 12 Times New Roman)

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 KEY MESSAGES FROM THIS CLASS

By now, you should be able to:

• Differentiate sensation from perception .
• Understand the relationship between perception and memory (no memory, no perception)
• Differentiate: illusion, hallucination, and delusion
• Be aware of different types of visual illusions. In particular, some of these illusions are
common and commonly ignored in our business contexts (e.g., T-illusion, Poggendorff illusion,
distance illusion, etc.)
• Differentiate ordinary perception (conscious) from sub-liminal perception (sub-conscious)
• Know that we do not have evidence that subliminal perception will change our behaviors
substantially

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