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Perception and Individual Decision Making
Chapter FIVE
What Is Perception, and Why Is It Important?
•People’s behavior is People’s behavior is based on their based on their perception of what perception of what reality is, not on reality is, not on reality itself.reality itself.
•The world as it is The world as it is perceived is the world perceived is the world that is behaviorally that is behaviorally important.important.
Perception
A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.
Factors ThatInfluence
Perception
E X H I B I T 5–1
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.
Attribution Theory
When individuals observe behavior, they attempt to determine whether it is internally or externally caused.
Attribution TheoryE 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. In general, we
tend to blame the person first, not the situation.
Errors and Biases in Attributions (cont’d)
Self-Serving Bias
The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors.
Thought: When student gets an “A” on an exam, they often say they studied hard. But when they don’t do well, how does the self serving bias come into play?
Hint: Whose fault is it usually when an exam is “tough”?
Frequently Used Shortcuts in Judging Others
Selective Perception
People selectively interpret what they see on the basis of their interests, background, experience, and attitudes.
Frequently Used Shortcuts in Judging Others
Halo Effect
Drawing a general impression about an individual on the basis of a single characteristic
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 characteristics
Frequently Used Shortcuts in Judging Others
Projection
Attributing one’s own characteristics to other people.
Stereotyping
Judging someone on the basis of one’s perception of the group to which that person belongs.
Specific Applications in Organizations
Employment Interview– Perceptual biases of raters affect the accuracy
of interviewers’ judgments of applicants. Performance Expectations
– Self-fulfilling prophecy (Pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities.
Ethnic Profiling– A form of stereotyping in which a group of
individuals is singled out—typically on the basis of race or ethnicity—for intensive inquiry, scrutinizing, or investigation.
Specific Applications in Organizations (cont’d)
Performance Evaluations– Appraisals are often the subjective (judgmental)
perceptions of appraisers of another employee’s job performance.
The Link Between Perceptions and Individual Decision Making
Perception of the
decision maker
Outcomes
ProblemA perceived discrepancy between the current state of affairs and a desired state.DecisionsChoices made from among alternatives developed from data perceived as relevant.
Assumptions of the Rational Decision-Making Model
Model Assumptions• Problem clarity• Known options• Clear preferences• Constant
preferences• No time or cost
constraints• Maximum payoff
Rational Decision-Making Model
Describes how individuals should behave in order to maximize some outcome.
Steps in the Rational Decision-Making Model
1. Define the problem.
2. Identify the decision criteria.
3. Allocate weights to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.
E X H I B I T 5–3
The Three Components of Creativity
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.
E X H I B I T 5–4Source: T.M. Amabile, “Motivating Creativity in Organizations,” California Management Review, Fall 1997, p. 43.
How Are Decisions Actually Made in Organizations?
Bounded Rationality
Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.
How Are Decisions Actually Made in Organizations? (cont’d)
How/Why problems are Identified– 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.
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.
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.
Common Biases and Errors
Escalation of Commitment– In spite of new negative information,
commitment actually increases!
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
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
Individual Differences in Decision Making
Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.
Personality Aspects of conscientiousness and escalation of
commitment. Self Esteem High self serving bias Gender
Women tend to analyze decisions more than men.
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
– Past decisions influence current decisions.
Cultural Differences in Decision Making
Problems selected Time orientation Importance of logic and rationality Belief in the ability of people to solve problems Preference for collective decision making
Ethics in Decision Making
Ethical Decision Criteria– Utilitarianism
• Seeking the greatest good for the greatest number.– Rights
• Respecting and protecting basic rights of individuals such as whistleblowers.
– Justice• Imposing and enforcing rules fairly and impartially.
Ethics in Decision Making
Ethics and National Culture– There are no global ethical standards.– The ethical principles of global organizations
that reflect and respect local cultural norms are necessary for high standards and consistent practices.
Ways to Improve Decision Making
1. Analyze the situation and adjust your decision making style to fit the situation.
2. Be aware of biases and try to limit their impact.
3. Combine rational analysis with intuition to increase decision-making effectiveness.
4. Don’t assume that your specific decision style is appropriate to every situation.
5. Enhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogies.
Toward Reducing Bias and Errors
Focus on goals.– Clear goals make decision making easier and help
to eliminate options inconsistent with your interests.
Look for information that disconfirms beliefs.– Overtly considering ways we could be wrong
challenges our tendencies to think we’re smarter than we actually are.
Don’t try to create meaning out of random events.– Don’t attempt to create meaning out of
coincidence. Increase your options.
– The number and diversity of alternatives generated increases the chance of finding an outstanding one.E X H I B I T 5–5Source: S.P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control
of Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), pp. 164–68.
It’s your little sister’s senior Prom night, and she notices
that everyone is wearing the same dress she has on!
Which perceptual shortcut may be occurring?
• Escalation of commitment Escalation of commitment
• Representative biasRepresentative bias
• Availability Bias Availability Bias
• Hindsight Bias Hindsight Bias
Chapter Check-Up: Perception
It’s your little sister’s senior Prom night, and she notices that
everyone is wearing the same dress she has on! Which
perceptual shortcut may be occurring?
Chapter Check-Up: Perception
• Escalation of commitment Escalation of commitment
• Representative biasRepresentative bias
• Availability Bias Availability Bias
• Hindsight BiasHindsight Bias
Discuss with your neighbor what the answer would be if your sister came home and said “I just knew that everyone would buy
that dress!”
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. Discuss with a neighbor.
Chapter Check-Up: Perception
Michael 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. He then considers his options for when he can take each
class again, as well as the costs and benefits for taking each this
semester versus later next year. He then makes his decision.
Michael has just engaged in what?
Chapter Check-Up: Decision Making
In making his decision, Michael forgot to consider the implications of the color of paint in the room where each class was being offered. Given that room color can influence mood, which can influence performance, why didn’t Michael consider it?
Chapter Check-Up: Decision Making
Michael engaged in the
rational decision making model,
and didn’t consider the paint color of the rooms because he operates
under the confines of
bounded rationality.
Chapter Check-Up: Decision Making
Chapter Checkup: What biases might have affected Martha
Stewart’s judgment? Discuss with a classmate.
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