1. HNDBM – 6. Perception & Individual Decision Making
Lim Sei cK

2. Perception
A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.
Individuals may look at the same thing, yet perceive it differently.

3. FACTORS IN THE PERCEIVER Attitudes Motives Interests Experience
Expectations
FACTORS IN THE TARGET
Motion
Sounds
Size
Background
Similarity
PERCEPTION
FACTORS IN THE SITUATION
Time
Work setting
Social setting

4. Attribution theory
When individuals observe behavior, they attempt to determine whether it is internally or externally caused.
Depends on:
Distinctiveness – displays different behaviors in different situations
Consensus – everyone with a similar situation responds in the same way
Consistency – respond the same way over time

5. 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.
Self-serving bias – the tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors.

6. Shortcuts in judging others
Selective perceptions
Halo effect
Contrast effect
Projection
Stereotyping
Self-fulfilling prophecy
Profiling

7. 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 characteristics.
Contrast effect – evaluation of a persno’s characteristics that are affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics.

8. 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.
Self-fulfilling prophecy – a situation in which one person inaccurately perceives a second person and the resulting expectations cause the second person to behave in ways consistent with the original perceptions.
Profiling – a group of individuals is singled out – typically on the basis of race or ethnicity – for intensive inquiry or investigation.

9. Decisions – the choices made from among two or more alternatives
Problem – a discrepancy between some current state of affairs and some desired state

10. Rational decision-making process
Making consistent, value-maximizing choices within specified constraints.
Rational decision-making model – a decision-making model that describes how individuals should behave in order to maximize some outcome.
Defining the problem
Identify the decision criteria
Allocate weights to the criteria
Develop the alternatives
Evaluate the alternatives
Select the best alternative

11. Assumptions of the model
Problem clarity
Known options
Clear preferences
Constant preferences
No time or cost constraints
Maximum payoff

12. Improving creativity in Decision Making
Creativity – the ability to produce useful ideas
Ideas that are different from what’s been done before but that are also appropriate to the problem or opportunity presented.

13. Three-component model of creativity
Proposes that individual creativity requires expertise, creative-thinking skills and intrinsic task motivation
Expertise – foundation for all creative work
Creative-thinking skills – personality characteristics associated with creativity.
Intrinsic task motivation - desire to work on something

14. Decisions in organizations
Bounded Rationality – individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity

15. Common biases and errors
Overconfidence bias
Anchoring bias
Confirmation bias
Availability bias
Representative bias
Escalation of Commitment bias
Randomness Error
Hindsight bias

16. Overconfidence bias – ‘no problem in judgment and decision making’
Anchoring bias – a tendency to fixate on initial information as a starting point.
Confirmation bias – a specific case of selective perception; we seek out information that reaffirms our past choices, and we discount information that contradicts past judgments.
Availability bias – the tendency for people to base their judgments on information that is readily available to them

17. Representative bias – assessing the likelihood of an occurrence by trying to match it with a preexisting category.
Escalation of Commitment Error – an increased commitment to a previous decision in spite of negative information.
Randomness Error – difficulty dealing with chance.
Hindsight bias – the tendency for us to believe falsely that we’d have accurately predicted the outcome of an event, after that outcome is actually known.

18. Intuition
Intuitive decision making – an unconscious process created out of distilled experience.
Eight conditions for intuitive decision making –
When high level of uncertainty exists
When there is little 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 are several plausible alternative solutions from which to choose
When time is limited and there is pressure

19. Decision making style
Directive – low tolerance for ambiguity and seek rationality
Analytic – greater tolerance for ambiguity
Conceptual – tend to use data from multiple sources and consider many alternatives
Behavioral – strong concern for the people in the organization and their development

20. Ethical decision criteria
Utilitarianism – decisions are made to provide the greatest good for the greatest number
Whistle-blowers – individuals who report unethical practices by their employer to outsiders
Justice – impose and enforce rules fairly so that there is an equitable distribution of benefits and costs.

21. Presentation Q
When relying on intuition, the decision maker often arrives at a conclusion without using a step-by-step logical process. Can we just depend on intuition? Explain.