1. Midterm -1 27th June- Class Time
Covers Ch 1,2,3,4
20% MCQ
40% SQ
40% LQ

2. IOA- C2 Jun 25-27

3. Perception and Individual Decision Making
Chapter 5
Muslims are terrorist!
Hindus are transferring assets to India
Aborigines make trouble
……..
Perception and
Individual Decision Making

4. What Is Perception, and Why Is It Important?
People’s behavior is based on their perception of what reality is, not on (objective) reality itself.
Reality
Behavior
A great org. to work for

5. Factors Influencing Perception
Personal
Characteristics
Context
Relationship to background
-Grouping
Shape
Distort

6. Person Perception: Making Judgments About Others
Judging:
Why people act the way they do?
What is causing it?
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.

7. Individual’s behavior
Attribution Theory
Individual’s behavior
Everyone’s behavior
Individual’s action

8. Errors and Biases in Attributions
Poor Sales Performance

9. Errors and Biases in Attributions …

10. Frequently Used Shortcuts in Judging Others
Comprehensive Case Study
Important problems
Boss reprimand certain people and not others

11. Frequently Used Shortcuts in Judging Others
HP CEO- Fiorina
Articulate, decisive, charismatic … Vs. unproven, egotistical, inflexible
Halo Effect
Draw a general impression about others on the basis of a single attribute/characteristic
intelligence, appearance
an instructor, a student who comes in late in the first class
Contrast Effect
Contrast effects (can) distort perceptions
Do we evaluate a person in isolation? Or influenced by other persons we have recently encountered.
Interviewer sees a pool of job applicants.
Children, Animal and You 

12. Frequently Used Shortcuts in Judging Others- Stereotyping
Judge someone on the basis of our perception of the group to which he or she belongs
Generalization has advantages!
Success in the past
Women Vs. Men
Relocation, Childcare
Profiling- Arab descant!
Balance

13. Shortcuts in Organizations
Employment Interview (1/10th Second, 4/5 mins)
Perceptual biases affect the accuracy of interviewers’ judgments
Performance Expectations
Behave according to Expectation (Students)
Self-fulfilling prophecy (pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities.
Performance Evaluations (Promotion, Pay)
Appraisals are subjective perceptions. (Vs. Objective)
Assessment is a subjective judgment subject to perceptual distortion and bias
Employee Effort
Errors
Selective
Halo
Contrast

14. The Link Between Perceptions and Individual Decision Making
Empowerment make the issue even more critical
Reaction
Perceptions of the decision maker
Is this a problem?
What is acceptable ?
Outcomes

16. Rational Decision-Making Model
Step follows in a logical/rational order
based on thinking through and weighing up the alternatives
Goal
Maximize outcome
Assumptions
Problem clarity
Known options
Clear preferences
Constant preferences
No time or cost constraints
Maximum payoff
Steps

17. Steps in the Rational Decision-Making Model
Define the problem.
Identify the decision criteria.
Allocate weights to the criteria.
Develop the alternatives.
Evaluate the alternatives.
Select the best alternative.
Optimize

18. Source: http://en.wikipedia.org/wiki/Rational_planning_model

19. How Are Decisions Actually Made in Organizations

20. How Are Decisions Actually Made in Organizations …
Pitfalls
Identify problems
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.

21. Common Biases and Errors
Overconfidence Bias
Believing too much in our own ability to make good decisions.
Anchoring Bias
Using early, first received information as the basis for making subsequent judgments.
Confirmation Bias
Using only the facts that support our decision.

22. Common Biases and Errors
Availability Bias
Using information that is most readily at hand.
Recent , Vivid
Representative Bias
“Mixing apples with oranges”
Assessing the likelihood of an occurrence by trying to match it with a preexisting category using only the facts that support our decision.
Winner’s Curse
Highest bidder pays too much
Likelihood of “winner’s curse” increases with the number of people in auction.

23. Common Biases and Errors

24. Common Biases and Errors
Randomness Error
Creating meaning out of random events
Hindsight Bias
Looking back, once the outcome has occurred, and believing that you accurately predicted the outcome of an event
9/11 Prediction

26. Intuition Intuitive Decision Making
An unconscious process created out of distilled experience.
Conditions Favoring Intuitive Decision Making
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
Several plausible alternative solutions exist
Time is limited and pressing for the right decision

27. Making Choices … Individual Differences
Errors
Bounded Rationality
Common Biases & Errors
Intuition
Personality
Escalation of commitment
Facets of Conscientiousness
Achievement Striving
Forestall failure
Dutifulness
Best for the organization
Self serving bias
High self esteem
Gender
Rumination
Analyzing decision
Over-thinking
Age

28. Organizational Constraints
Decision makers make action choices that are favored by the organization
Managers’ Decisions
Performance Evaluation (Evaluation criteria)
Division manager Vs. Negative information
Reward Systems
Risk aversion at GM (Low profile managers)
Formal Regulations
Rules and policies limit the alternative- Franchise
System-imposed Time Constraints
Deadlines- New product development
Historical Precedents
Past decisions influence current decisions- Budget

29. Ethics in Decision Making
Utilitarianism- Outcomes and consequences
Seeking the greatest good for the greatest number
Maximizing profit- firing decision (Questionable!)
Rights
Respecting and protecting basic rights of individuals
Protecting Whistle blowers
Justice
Imposing/enforcing rules fairly and impartially.
Equitable distribution of benefits and cost

30. Ways to Improve Decision Making
Analyze situation and adjust decision
Be aware of biases- limit their impact.
Rational analysis with intuition –effective
Enhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogies
Reducing Bias and Errors
Novel and Useful Idea

31. Reducing Bias and Errors
Focus on goals.
Clear goals
Decision making easier
Eliminate options inconsistent w/interests
Look for information that disconfirms beliefs
Considering ways we could be wrong
we’re smarter than we actually are
Don’t try create meaning off randomness/coincidence
Increase your options.
Number and diversity
Be Creative

32. The Three Components of Creativity

33. Chapter Check-Up: Perception
It’s your little sister’s senior school party, and she notices that everyone is wearing the same dress she has on! Which perceptual shortcut may be occurring?
Escalation of commitment
Representative bias
Availability Bias
Hindsight Bias
Availability Bias

34. Chapter Check-Up: Perception
If all of these perceptual shortcuts happen unconsciously, how can we keep the stereotypes we have from interfering with the way we work in group projects?
Identify two specific things you could do to help prevent stereotypes from inhibiting effective group relationships.
Diversity Training

35. Decision Making … Example
Rashid has just discovered he is double registered for two classes at the same time and must make a decision about which one to take this semester. He considers the
professor teaching this semester
the time of the class, and
the classes his friends are taking.
when you can take each class again
costs and benefits for taking each this semester versus later next year.
He then makes his decision. You just engaged in _____________________ ?

36. IOA- C5 July 4-5