Perception and Individual Decision Making-Behaviour in Organization-Lecture Slides, Slides for Organizational Behaviour. Mizoram University
devnarayan11 July 2012

Perception and Individual Decision Making-Behaviour in Organization-Lecture Slides, Slides for Organizational Behaviour. Mizoram University

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Dr. Lalita Shikha delivered this lecture at Mizoram University for Organizational Behaviour course. Its main points are: Perception, Individual, Decision, Making, Attribute, Theory, Bounded, Rationality, Creativity
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Robbins & Judge Organizational Behavior 13e

Bob Stretch Southwestern College

Robbins & Judge

Organizational Behavior 13th Edition

Perception and Individual Decision Making


Chapter Learning Objectives

After studying this chapter, you should be able to:

– Define perception and explain the factors that influence it.

– Explain attribute theory and list the three determinants of attribution.

– Identify the shortcuts individuals use in making judgments about others.

– Explain the link between perception and decision making.

– Apply the rational model of decision-making and contrast it with bounded rationality and intuition.

– List and explain the common decision biases or errors.

– Explain how individual differences and organizational constraints affect decision-making.

– Contrast the three ethical decision criteria.

– Define creativity and discuss the three-component model of creativity.


What is Perception?

 A process by which individuals organize and interpret their

sensory impressions in order to give meaning to their


 People’s behavior is based on their perception of what

reality is, not on reality itself.

 The world as it is perceived is the world that is

behaviorally important.


Factors that Influence Perception


See E X H I B I T 5-1

Attribution Theory: Judging Others

 Our perception and judgment of others is significantly influenced by our assumptions of the other person’s internal state.

– When individuals observe behavior, they attempt to determine whether it is internally or externally caused.

• Internal causes are under that person’s control

• External causes are not – person forced to act in that way

 Causation judged through:

– 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.


Elements of Attribution Theory


See E X H I B I T 5-2

Errors and Biases in Attributions

Fundamental Attribution Error

– The tendency to underestimate the influence of external

factors and overestimate the influence of internal factors

when making judgments about the behavior of others

We blame people first, not the situation

Self-Serving Bias

– The tendency for individuals to attribute their own successes

to internal factors while putting the blame for failures on

external factors

It is “our” success but “their” failure


Frequently Used Shortcuts in Judging Others

Selective Perception

– People selectively interpret what they see

on the basis of their interests,

background, experience, and attitudes

Halo Effect

– Drawing a general impression about an

individual on the basis of a single


Contrast Effects

– Evaluation of a person’s characteristics

that are affected by comparisons with

other people recently encountered who

rank higher or lower on the same



Another Shortcut: Stereotyping

Judging someone on the basis of one’s perception of the

group to which that person belongs – a prevalent and often

useful, if not always accurate, generalization


– A form of stereotyping in which members of a group are

singled out for intense scrutiny based on a single, often

racial, trait.


Specific Shortcut Applications in Organizations

 Employment Interview

– Perceptual biases of raters affect the accuracy of

interviewers’ judgments of applicants

– Formed in a single glance – 1/10 of a second!

 Performance Expectations

– Self-fulfilling prophecy (Pygmalion effect): The lower or

higher performance of employees reflects preconceived

leader expectations about employee capabilities

 Performance Evaluations

– Appraisals are often the subjective (judgmental) perceptions

of appraisers of another employee’s job performance

– Critical impact on employees


Perceptions and Individual Decision Making


– A perceived discrepancy between the

current state of affairs and a desired state


– Choices made from among alternatives

developed from data

Perception Linkage:

– All elements of problem identification and

the decision making process are influenced

by perception.

• Problems must be recognized

• Data must be selected and evaluated


Decision-Making Models in Organizations

Rational Decision-Making

– The “perfect world” model: assumes complete information,

all options known, and maximum payoff.

– Six step decision-making process

Bounded Reality

– The “real world” model: seeks satisfactory and sufficient

solutions from limited data and alternatives


– A non-conscious process created from distilled experience

that results in quick decisions

• Relies on holistic associations

• Affectively charged – engaging the emotions


See E X H I B I T 5-3

Common Biases and Errors in Decision-Making

 Overconfidence Bias

– Believing too much in our own ability to make good

decisions – especially when outside of own expertise

 Anchoring Bias

– Using early, first received information as the basis for

making subsequent judgments

 Confirmation Bias

– Selecting and using only facts that support our decision

 Availability Bias

– Emphasizing information that is most readily at hand

• Recent

• Vivid


More Common Decision-Making Errors

 Escalation of Commitment

– Increasing commitment to a decision in spite of evidence

that it is wrong – especially if responsible for the decision!

 Randomness Error

– Creating meaning out of random events - superstitions

 Winner’s Curse

– Highest bidder pays too much due to value overestimation

– Likelihood increases with the number of people in auction

 Hindsight Bias

– After an outcome is already known, believing it could have

been accurately predicted beforehand


Individual Differences in Decision-Making


– Conscientiousness may effect escalation of commitment

• Achievement-strivers are likely to increase commitment

• Dutiful people are less like to have this bias

– Self-Esteem

• High self-esteem people are susceptible to self-serving bias



• Women analyze decisions more than men –


• Women are twice as likely to develop


• Differences develop early

Organizational Constraints

 Performance Evaluation

– Managerial evaluation criteria influence actions

 Reward Systems

– Managers will make the decision with the greatest personal

payoff for them

 Formal Regulations

– Limit the alternative choices of decision makers

 System-imposed Time Constraints

– Restrict ability to gather or evaluate information

 Historical Precedents

– 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


– Justice

• Imposing and enforcing rules fairly and impartially

• Equitable distribution of benefits and costs


Ethical Decision-Making Criteria Assessed


– Pro: Promotes efficiency and productivity

– Con: Can ignore individual rights, especially minorities


– Pro: Protects individuals from harm; preserves rights

– Con: Creates an overly legalistic work environment


– Pro: Protects the interests of weaker members

– Con: Encourages a sense of entitlement


Improving Creativity in Decision Making


– The ability to produce novel and useful ideas

Who has the greatest creative potential?

– Those who score high in Openness to Experience

– People who are intelligent, independent, self-confident, risk-

taking, have an internal locus-of-control, tolerant of

ambiguity, low need for structure, and who persevere in the

face of frustration


The Three Component Model of Creativity

Proposition that individual

creativity results from a

mixture of three


– Expertise is the foundation

– Creative-Thinking Skills are the

personality characteristics

associated with creativity

– Intrinsic Task Motivation is the

desire to do the job because of

its characteristics


See E X H I B I T 5-4


Creative- Thinking Skills

Intrinsic Task


Global Implications


– There are cultural differences in the ways people attribute

cause to observed behavior


– No research on the topic: assumption of “no difference”

– Based on our awareness of cultural differences in traits that

affect decision making, this assumption is suspect


– No global ethical standards exist

– Asian countries tend not to see ethical issues in “black and

white” but as shades of gray

– Global companies need global standards for managers


Summary and Managerial Implications


– People act based on how they view their world

– What exists is not as important as what is believed

– Managers must also manage perception

Individual Decision Making

– Most use bounded rationality: they satisfice

– Combine traditional methods with intuition and creativity for

better decisions

• Analyze the situation and adjust to culture and organizational

reward criteria

• Be aware of, and minimize, biases


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any

means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the

United States of America.

Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall


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