Chapter

SIX

Perception and
Individual Decision
Making
1

What is the perceptual process?

Perception.
The process by which people select, organize,

interpret, retrieve, and respond to information.

Perceptual information is gathered from:
Sight.
Hearing.

Touch.
Taste.

Smell.

Person Perception: Making Judgments

About Others

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.

Errors and Biases in Attributions

Errors and Biases in Attributions

(contd)

Common shortcuts in judging others

Selective Perception
Halo effect

Stereo typing
Contrast effect

Common Shortcuts in Judging Others

Common Shortcuts in Judging Others

10

Common Shortcuts in Judging Others

11

Specific Applications of shortcuts in

Organizations
Employment Interview
Perceptual biases affect the accuracy
interviewers judgments of applicants.

of

Performance Expectations
Self-fulfilling prediction (Pygmalion effect): The
lower or higher performance of employees reflects
preconceived leader expectations about employee
capabilities.

Performance Evaluations
Appraisals are
performance.

subjective

perceptions

of
12

The Link Between Perceptions and

Individual Decision Making

Perceptions of
the decision
maker

Outcomes

13

Decision Making in Organizations

Model Assumptions

Rational DecisionMaking Model

Problem clarity

Describes how
individuals should
behave in order to
maximize some
outcome.

Clear preferences

Known options
Constant
preferences

No time or cost
constraints
Maximum payoff
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15

Common Bias and Errors in Decision

Making
Overconfidence Bias
Believing too much in our own decision
competencies.

Anchoring Bias
Fixating on early, first received information.

Confirmation Bias
Using only the facts that support our decision.

Availability Bias
Using information that is most readily at hand.

16

Common Bias and Errors in Decision

Making
Representative Bias
Assessing the likelihood of an occurrence by
trying to match it with a preexisting category.

Escalation of commitment
An increased commitment to a previous decision
in spite of negative information.

Randomness Error
The tendency of individuals to believe that they
can predict the outcome of random events
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Common Bias and Errors in Decision

Making
Risk Aversion:
The tendency to prefer a sure gain of a
moderate amount over a riskier outcome, even
if the riskier outcome might have a higher
expected payoff.

Hindsight Bias
The tendency to believe falsely, after an
outcome of an event is actually known, that
one would have accurately predicted that
outcome
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19

Individual Differences on Decision

Making
Personality
Gender

Mental Ability
Cultural Differences

20

Organizational Constraints on Decision Makers

Performance Evaluation
Evaluation criteria influence the choice of actions.
Reward Systems
Decision makers make action choices that are favored
by the organization.
Formal Regulations
Organizational rules and policies limit the alternative
choices of decision makers.
System-imposed Time Constraints
Organizations require decisions by specific deadlines.
Historical Precedents
21
Past decisions influence current decisions.

Ethics in Decision Making

Ethical Decision Criteria
Utilitarianism
Decisions made based solely on the outcome
Seeking the greatest good for the greatest number
Dominant method for businesspeople
Rights
Decisions consistent with fundamental liberties and
privileges
Respecting and protecting basic rights of individuals
such as whistleblowers
Justice
Imposing and enforcing rules fairly and impartially
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Equitable distribution of benefits and costs

Improving Creativity in Decision

Making
Creativity
The ability to produce
novel and useful ideas.

Three-Component
Model of Creativity
Proposition that individual
creativity requires expertise,
creative-thinking skills, and
intrinsic task motivation.
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End
Of
CHAPTER 6
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