1. Chapter 2 contd. Perception and Individual Decision Making
Essentials of
Organizational Behavior, 10/e
Stephen P. Robbins & Timothy A. Judge
Chapter 2 contd.
Perception and Individual Decision Making

2. After studying this chapter, you should be able to:
Define perception and explain the factors that influence it.
Identify the shortcuts individuals use in making judgments about others.
Explain the link between perception and decision making.
List and explain the common decision biases or errors.
Contrast the three ethical decision criteria.
Define creativity and discuss the three-component model of creativity.

3. 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.

4. Factors Influencing Perception
Situation
Perceiver
Target

5. Perceiver- When individual looks at the target and interpret what she sees,that interpretation is influenced by person’s attitude,personality,motives,interest,past experience.
Target – Characteristic of the target can affect how it is perceived.
Situation-Target is related to background.The context in which perception is made also influences the perception.

6. Person Perception: Attribution Theory
Suggests that perceivers try to “attribute” the observed behavior to a type of cause:
Internal – behavior is believed to be under the personal control of the individual
External –the person is forced into the behavior by outside events/causes

7. Determinants of Attribution
Distinctiveness – whether an individual displays different behaviors in different situations (the uniqueness of the act) Usual behavior ( if the worker always blows off commitments )– internal Unusual behavior (if the worker rarely not take up commitments)- external Consensus – does everyone who faces a similar situation respond in the same way as the individual did. External – If every employee following same procedure shows delay in work

8. Cont…..
internal – if only one employee delays the work whereas others complete at earlier time
Consistency – does the person respond the same way over time.
external - if late for once after a long period
internal – if late twice or thrice a week

9. Determination of Attribution

10. Attribution Errors Fundamental Attribution Error Self-Serving Bias
The tendency to underestimate the influence of external factors and overestimate that of internal factors.
(sales man example – laziness to new products laucnched by competitor)
Self-Serving Bias
Occurs when individuals overestimate their own (internal) influence on successes and overestimate the external influences on their failures.(eg : Iraq war)

11. Shortcuts Used in Judging Others
Selective Perception – Any characteristic that makes a person ,object or event stand out will increase the probability that it will be perceived. A perceptual filtering process based on interests, background, and attitude. May allow observers to draw unwarranted conclusions from an ambiguous situation.
Halo Effect – drawing a general impression based on a single characteristic- intelligence,sociability or appearance. (eg: classroom instructor’s zeal to teach)
Contrast Effects – our reaction is influenced by others we have recently encountered (the context of the observation). (eg : candidates for jobs)

12. Projection – Its easy to judge people if you consider they are similar to us.
Stereotyping – judging someone on the basis of the perception of the group to which they belong.

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

14. Rational Decision-Making Model
Seldom actually used: more of a goal than a practical method
Define the problem.
Identify the decision criteria- decision makers interest, values and personal preferences into process
Allocate weights to the criteria- to give them proper priority
Develop the alternatives – No step is taken to appraise the alternatives only to list them.
Evaluate the alternatives – Rate each alternative on each criteria. Strength and weakness of each alternative is evaluated.
Select the best alternative- select the alternative with highest score.

15. Assumptions of the Model
Problem clarity – The decision maker has complete information regarding the decision situation.
Known Options – Identify the relevant criteria and list all viable alternatives and their consequences.
Clear preferences – Rationality assumes the criteria and alternatives can be ranked and weighted.
Constant preferences – Specific decision criteria are constant and weights are stable.
No time or cost constraints
Choose the best alternative

16. Improving Creativity in Decision Making
Creativity helps decision maker (i) identify viable alternatives. (ii) Identify alternatives that are not apparent. (iii) To visualize problems that others cannot see. (iv) Fully understand the problem.

17. Creative Potential
Creativity is the ability to produce novel and useful ideas.
When taking decisions many people use their creative potential
Traits associated with creative people are intelligence, self confidence, risk taking and internal locus of control, tolerance for ambiguity, perseverance.

18. Three-Component Model of Creativity
Expertise
Intrinsic Task Motivation
Creative-Thinking Skills

19. 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 (they “satisfice”) Bounded rationality is constructing simplified models that extract the essential features from problems without capturing all their complexity

20. Decision Making in Bounded Rationality
Simpler than rational decision making, composed of three steps:
Limited search for criteria and alternatives – familiar criteria and easily found alternatives
Limited review of alternatives – focus alternatives, similar to those already in effect
Decision maker will begin with alternative that differ only relatively small degree from choice currently in effect.
Satisficing – selecting the first alternative that is “good enough”

21. Common Biases and Errors
Overconfidence Bias – Persons with intellectual and interpersonal abilities are weakest are more likely to overestimate their abilities and performance.
Managers and employees become more knowledgeable about issues are less likely to display overconfidence.
Overconfidence is more when the issues are not from their expertise

22. The anchoring bias – It is a tendency to fixate initial information
The anchoring bias – It is a tendency to fixate initial information. Mind does not give appropriate amount of emphasis to first information it receives.
Confirmation Bias – specific case of selective perception.We tend to accept the information that confirms our view,while rejecting the info that challenges our view.
Availability Bias – Tendency for people to base their judgment on information that is readily available to them.
Managers doing annual performance appraisal tend to give more weight on recent behavior of Employees.
Representative Bias – Relating different issues to the past occurred issue.
Randomness Error –our tendency to believe we predict the outcome of random events is called randomness error.

23. Common Biases and Errors
Availability Bias
The tendency to base judgments on information that is readily available
Escalation of Commitment
Staying with a decision even when there is clear evidence that it is wrong
Hindsight Bias
The tendency to believe falsely that we could have accurately predicted the outcome of an event after that outcome is already known

24. Intuitive Decision Making
An non-conscious process created out of distilled experience
Increases with experience
Can be a powerful complement to rational analysis in decision making

25. When people make intutive decision making ?
When high level of uncertainty exists
When there is less precedent to draw on
When variables are less scientifically predictable?
When facts are limited
When facts don’t clearly point the way
When analytical data are of little use
When there is possible alternative solution.

26. Organizational Constraints on Decision Making
Performance evaluations
Reward systems
Formal regulations
Self-imposed time constraints
Historical precedents

27. Performance Evaluation
Managers are strongly influenced in their decision making by criteria on which they are evaluated.If a plant manager believes that his manufacturing plant is operating best , then it is understand that the employees do not let him hear anything negative

28. Reward Systems
An organization’s reward system influences decision makers by suggesting to them what choices are preferable in terms of personal payoff.
If organization avoids risk – Managers should take conservative decisions

29. Formal Regulations
All organizations create rules, policies, procedures, and other formalized regulations to standardize the behavior of their members.
By programming decisions organizations are able to get individuals to high level of performance

30. System Imposed Time Constraints
A set of decisions must be quickly to stay competitive and keep customers satisfied.
All important decisions come with deadlines.
They create time pressures on decision makers.
It becomes difficult to collect all information before making a final choice.

31. Historical Precedents
Individual decisions are more accurately characterized as points in a stream of decisions.
Decisions made in past affects the decisions newly made.

32. Ethical Frameworks for Decision Making
Utilitarian
Provide the greatest good for the greatest number
Rights
make decisions consistent with fundamental liberties and privileges
Justice
impose and enforce rules fairly and impartially so that there is equal distribution of benefits and costs

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

34. Global Implications Attributions: Decision Making: Ethics:
Cross-cultural differences exist – especially in collectivist traditions
Decision Making:
Cultural background of the decision maker can have significant influence on decisions made
Ethics:
No global ethical standards exist
Need organizational-level guidance

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

36. Keep in Mind…
People have inherent biases in perception and decision making
Understanding those biases allows for better prediction of behavior
Biases can be helpful
Managers must determine when the bias may be counterproductive
Creativity aids in decision making
Helps to appraise, understand, and identify problems

37. Summary
Defined perception and explained the factors that influence it.
Identified the shortcuts individuals use in making judgments about others.
Explained the link between perception and decision-making.
Listed and explained the common decision biases or errors.
Contrasted the three ethical decision criteria.
Defined creativity and discussed the three-component model of creativity.