1. Perception and Individual Decision Making
Essentials of Organizational Behavior, 9/e
Stephen P. Robbins/Timothy A. Judge
Chapter 4
Perception and Individual Decision Making

2. After studying this chapter, you should be able to:
Explain how two people can see the same thing and interpret it differently.
List three determinants of attribution.
Describe how shortcuts can assist in or distort our judgment of others.
Explain how perception affects the decision-making model.
Outline the six steps in the rational decision-making model.

3. After studying this chapter, you should be able to:
Describe the actions of the boundedly rational decision maker.
List and explain the common decision biases or errors.
Identify the conditions in which individuals are most likely to use intuition in decision making.
Contrast the three ethical decision criteria.

4. Perception
A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.
The world as it is perceived is the world that is behaviorally important.

5. Factors Influencing Perception

6. Attribution Theory
Suggests that when we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused
Internally – believed to be under the personal control of the individual
Externally – resulting from outside causes

7. Determinants of Attribution
Distinctiveness – whether an individual displays different behaviors in different situations
Consensus – if everyone who faces a similar situation responds in the same way
Consistency – does the person respond the same way over time

8. Determination of Attribution

9. Attribution Errors
Fundamental Attribution Error – when we make judgments about the behavior of others, we tend to underestimate external influence and overestimate internal influence
Self-serving Bias – we tend to attribute our own success to internal factors and put the blame for failure on external factors

10. Shortcuts used in Judging Others
Selective Perception – a characteristic that makes someone stand out in our mind will increase the probability that it will be perceived
Halo Effect – drawing a general impression based on a single characteristic
Contrast Effects – our reaction is influenced by others we have recently encountered
Projection – the tendency to attribute our own characteristics to other people
Stereotyping – judging someone on the basis of our perception of the group to which they belong

11. Link between Perception and Decision Making
Decision making occurs as a reaction to a problem
Perception influences:
Awareness that a problem exists
The interpretation and evaluation of information
Bias of analysis and conclusions

12. Rational Decision-Making Model

13. Assumptions of the Model
The problem is clear and unambiguous
Options are known
Clear preferences
Constant preferences
No time or cost constraints
Maximum payoff

14. Creativity in Decision Making
The ability to produce novel and useful ideas
Importance is:
Better understand the problem
See problems others can’t see
Identify all viable alternatives
Identify alternatives that aren’t readily apparent

15. Three-Component Model of Creativity

16. Bounded Rationality
The limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize
So people seek solutions that are satisfactory and sufficient, rather than optimal
Bounded rationality is constructing simplified models that extract the essential features from problems without capturing all their complexity

17. Common Biases and Errors
Overconfidence Bias – As managers and employees become more knowledgeable about an issue, the less likely they are to display overconfidence
Anchoring Bias – a tendency to fixate on initial information and fail to adequately adjust for subsequent information
Confirmation Bias – seeking out information that reaffirms our past choices and discounting information that contradicts past judgments

18. Common Biases and Errors
Availability Bias – the tendency to base judgments on information that is readily available
Representative Bias – the tendency to assess the likelihood of an occurrence by inappropriately considering the current situation as identical to past situations
Escalation of Commitment – staying with a decision even when there is clear evidence that it is wrong

19. Common Biases and Errors
Randomness Error – the tendency to believe that we can predict the outcome of random events
Hindsight Bias – the tendency to believe falsely that we accurately predicted the outcome of an event after that outcome is actually known

20. Intuitive Decision Making
An unconscious process created out of distilled experience
Complements rational analysis
Can be a powerful force in decision making

21. When is Intuitive Decision Making Used?
A high level of uncertainty exists
There is little precedent to draw on
Variables are less scientifically predictable
“Facts” are limited
Facts don’t clearly point the way
Analytical data are of little use
There are several plausible alternatives with good arguments for each
Time is limited and there is pressure to come up with the right decision

22. Individual Differences
Personality – specific facets of conscientiousness affect escalation of commitment
Gender – Females are more likely to carefully consider problems and choices but also overanalyze and rehash the decision once it is made

23. Organizational Constraints
Performance Evaluation
Reward Systems
Formal Regulations
System-Imposed Time Constraints
Historical Precedents

24. Cultural Differences Culture of decision maker influences:
Time orientation
Importance of rationality
Belief in the ability of people to solve problems
Preference for collective decision making

25. Criteria used in making ethical choices
Utilitarian – provide the greatest good for the greatest number
Rights focus – make decisions consistent with fundamental liberties and privileges
Justice focus – impose and enforce rules fairly and impartially so that there is equal distribution of benefits and costs

26. Implications for Managers
To influence productivity, assess workers perceptions of their jobs
To improve decision making:
Analyze the situation
Be aware of biases and minimize their impact
Combine rational analysis with intuition
Try to enhance your creativity

27. Summary
Explained how two people can see the same thing and interpret it differently.
Listed three determinants of attribution.
Described how shortcuts can assist in or distort our judgment of others.
Explained how perception affects the decision-making model.
Outlined the six steps in the rational decision-making model.

28. Summary
Described the actions of the boundedly rational decision maker.
Listed and explained the common decision biases or errors.
Identified the conditions in which individuals are most likely to use intuition in decision making.
Contrasted the three ethical decision criteria.