PERCEPTION AND

INDIVIDUAL
DECISION MAKING

MGT544
Azfahanee Zakaria ( PhD)
UiTM Kedah
 Learning Objectives
• Explain the factors that influence perception.
• Describe attribution theory.
• Explain the link between perception and
decision making.
• Contrast the rational model of decision making
with bounded rationality and intuition.
• Explain how individual differences and
organizational constraints affect decision
making.
 What is perception?

• Perception is a process by
which individuals organize
and interpret their sensory
impressions to give meaning
to their environment.
• It is important to the study of
OB because people’s
behaviors are based on their
perception of what reality is,
not on reality itself.
Explain the Factors That Influence Perception
(2 of 2)

Exhibit 5-1 Factors That Influence Perception

Person Perception: Making Judgements
About Others.
ATTRIBUTION THEORY
• Suggests that when we observe an individual’s behavior, we
attempt to determine whether it was internally or externally
caused.
• Determination depends on three factors:

Distinctiveness

Consensus

Consistency
 ATTRIBUTION THEORY ( cont)

• Clarification of the differences between internal and external

caused:

Internally caused Externally caused

• those that are • resulting from
believed to be outside causes.
under the personal
control of the
individual.
 • Refers to whether an individual displays different
behavior in different situation.
• If the person exhibits the same behavior in different
situations, then distinctiveness is low; if they have
different behavior in different situation, then
distinctiveness is high.
Distinctiveness • Eg : Alison only smokes when she is out with
friends, her behavior is high in distinctiveness. If she
smokes at any time or place, distinctiveness is low.
• Distinctiveness low – Internally caused
• Distinctiveness high – externally caused

• Everyone behaves the same way in the same

situation. Therefore, the consensus is high. This
means the behavior is externally attributed.
Consensus • However, if everyone is early and you are the only
one who is late, then your behavior is internally
attributed.

• This individual is late for work everyday for the past

few months ( consistent pattern) , therefore
Consistency consistency is high. This means that it is internally
attributed
 Situation: To better understand consistency, distinctiveness,
and consensus, consider a workplace example.
• Nancy, a manager, has assigned a team of employees to develop a custom sales training
program for a client. As the project progresses, Nancy continues to see problems in the
work produced by Jim, one of the team members.
• In order to determine why Jim's performance is not satisfactory, Nancy first considers
consistency, or whether Jim has performed poorly on other similar team projects. A review
of his past performance appraisals indicates that he has not had prior performance
problems when creating custom sales training programs. This would lead Nancy to conclude
that there was an external cause of the poor performance.
• Second, Nancy considers distinctiveness; she wants to know if Jim has performed poorly on
different types of tasks. Again, in checking Jim's performance reviews, she finds that when
he is on a team to accomplish a different type of task, such as developing a selection
interview, he has excelled. This further points to an external cause of Jim's poor
performance.
• Finally, Nancy assesses consensus, or the behavior of others in this similar task. In asking the
team members about their experiences with the current project, she finds that many of
them have had difficulty in developing this custom sales training program.
• Thus, all indicators point to Jim's poor performance being caused by an external factor, such
as a difficult task or a demanding client. Based on this attribution, Nancy may explore ways
in which to minimize the negative effects of the external factors on Jim's performance rather
than attempting to influence his level of effort or ability.
Read more: https://www.referenceforbusiness.com/management/A-Bud/Attribution-Theory.html#ixzz6tfDefdiL
 Explain Attribution Theory
Exhibit 5-2 Attribution Theory
Explain Attribution Theory
• Fundamental attribution error
• Tendency to underestimate the
influence of external factors and
overestimate the influence of internal
or personal factors.
• Eg: manager blame staff laziness attitude instead of
admitting the superb innovative product of a competitor
• Self-serving bias
• Individuals take credits for all success
due to internal factors and blame
failures to external factors
Common Shortcuts in Judging Others
• Any characteristic that makes a person, object, or event stand
out will increase the probability that it will be perceived.
Selective perception • Since we can’t observe everything going on around us, we
engage in selective perception.

• The halo effect occurs when we draw a general

Halo effect impression based on a single characteristic
• Positive impression

• We do not evaluate a person in isolation.

Contrast effects • Our reaction to one person is influenced by other
persons we have recently encountered.

• Judging someone based on one’s perception of the group to

which that person belongs.
Stereotyping • We have to monitor ourselves to make sure we’re not unfairly
applying a stereotype in our evaluations and decisions.
 Effects of Common Shortcuts
• Applications of Shortcuts in
Organizations
• Employment Interview
• Evidence indicates that interviewers make perceptual
judgments that are often inaccurate.
• Interviewers generally draw
early impressions that become
very quickly entrenched.
• Studies indicate that most
interviewers’ decisions change
very little after the first four or
five minutes of the interview.
Effects of common shortcuts
• Performance Evaluation
• An employee’s performance
appraisal is very much dependent
upon the perceptual process.
• Many jobs are evaluated in
subjective terms.
• Subjective measures are
problematic because of
selective perception, contrast
effects, halo effects, and so on.
Explain the Link Between Perception and
Decision Making
• Individuals make decisions –
choosing from two or more
alternatives.
• Decision making occurs as a
reaction to a problem.
• There is a discrepancy between
some current state of affairs
and some desired state,
requiring consideration of
alternative courses of action.
• One person’s problem is another’s satisfactory
state of affairs.
Decision Making in Organizations

Rational Model

Bounded Rationality

Intuition
The Link Between Perception and Individual
Decision Making
Exhibit 5-3 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.
 Rational Model of Decision Making vs.
Bounded Rationality and Intuition (2 of 12)
• Assumptions of the Rational Model
• The decision maker…
• Has complete information.
• Is able to identify all the relevant options in an unbiased manner.
• Chooses the option with the highest utility.

• However, most decisions in the real world don’t follow the

rational model.
 Rational Model of Decision Making vs.
Bounded Rationality and Intuition (3 of 12)
• Bounded Rationality
• Most people respond to a
complex problem by reducing it
to a level at which it can be
readily understood.
• People satisfice – they seek
solutions that are satisfactory
and sufficient.
• Individuals operate within the
confines of bounded rationality.
• They construct simplified
models that extract the
essential features.
 Rational Model of Decision Making vs.
Bounded Rationality and Intuition (5 of 12)
• Intuition
• Intuitive decision making occurs outside conscious
thought; it relies on holistic associations, or links between
disparate pieces of information, is fast, and is affectively
charged, meaning it usually engages the emotions.
• The key is neither to abandon nor rely solely on intuition,
but to supplement it with evidence and good judgment.
Common Biases and Errors in Decision Making
• individuals whose intellectual and interpersonal abilities
Overconfidence Bias are weakest are most likely to overestimate their
performance and ability.

• fixating on initial information as a starting point and failing

Anchoring Bias to adequately adjust for subsequent information.

• type of selective perception. Seek out information that

Confirmation Bias: reaffirms past choices, and discount information that
contradicts past judgments.

• tendency for people to base judgments on information that

Availability Bias: is readily available.

• staying with a decision even when there is clear

Escalation of evidence that it’s wrong.
Commitment: • Likely to occur when individuals view themselves as
responsible for the outcome.
• our tendency to believe we can predict the outcome of random
events.
Randomness Error: • Decision making becomes impaired when we try to create
meaning out of random events.
Exhibit 5-4 Reducing Biases and Errors

Focus on goals

Look for Information That Disconfirms Your Beliefs

Don’t Try to Create Meaning out of Random Events

Increase Your Options.

THE END