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Midterm -1 27th June- Class Time

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1 Midterm -1 27th June- Class Time
Covers Ch 1,2,3,4 20% MCQ 40% SQ 40% LQ

2 IOA- C2 Jun 25-27

3 Perception and Individual Decision Making
Chapter 5 Muslims are terrorist! Hindus are transferring assets to India Aborigines make trouble …….. Perception and Individual Decision Making

4 What Is Perception, and Why Is It Important?
People’s behavior is based on their perception of what reality is, not on (objective) reality itself. Reality Behavior A great org. to work for

5 Factors Influencing Perception
Personal Characteristics Context Relationship to background -Grouping Shape Distort

6 Person Perception: Making Judgments About Others
Judging: Why people act the way they do? What is causing it? 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.

7 Individual’s behavior
Attribution Theory Individual’s behavior Everyone’s behavior Individual’s action

8 Errors and Biases in Attributions
Poor Sales Performance

9 Errors and Biases in Attributions …

10 Frequently Used Shortcuts in Judging Others
Comprehensive Case Study Important problems Boss reprimand certain people and not others

11 Frequently Used Shortcuts in Judging Others
HP CEO- Fiorina Articulate, decisive, charismatic … Vs. unproven, egotistical, inflexible Halo Effect Draw a general impression about others on the basis of a single attribute/characteristic intelligence, appearance an instructor, a student who comes in late in the first class Contrast Effect Contrast effects (can) distort perceptions Do we evaluate a person in isolation? Or influenced by other persons we have recently encountered. Interviewer sees a pool of job applicants. Children, Animal and You 

12 Frequently Used Shortcuts in Judging Others- Stereotyping
Judge someone on the basis of our perception of the group to which he or she belongs Generalization has advantages! Success in the past Women Vs. Men Relocation, Childcare Profiling- Arab descant! Balance

13 Shortcuts in Organizations
Employment Interview (1/10th Second, 4/5 mins) Perceptual biases affect the accuracy of interviewers’ judgments Performance Expectations Behave according to Expectation (Students) Self-fulfilling prophecy (pygmalion effect): The lower or higher performance of employees reflects preconceived leader expectations about employee capabilities. Performance Evaluations (Promotion, Pay) Appraisals are subjective perceptions. (Vs. Objective) Assessment is a subjective judgment subject to perceptual distortion and bias Employee Effort Errors Selective Halo Contrast

14 The Link Between Perceptions and Individual Decision Making
Empowerment make the issue even more critical Reaction Perceptions of the decision maker Is this a problem? What is acceptable ? Outcomes


16 Rational Decision-Making Model
Step follows in a logical/rational order based on thinking through and weighing up the alternatives Goal Maximize outcome Assumptions Problem clarity Known options Clear preferences Constant preferences No time or cost constraints Maximum payoff Steps

17 Steps in the Rational Decision-Making Model
Define the problem. Identify the decision criteria. Allocate weights to the criteria. Develop the alternatives. Evaluate the alternatives. Select the best alternative. Optimize

18 Source:

19 How Are Decisions Actually Made in Organizations

20 How Are Decisions Actually Made in Organizations …
Pitfalls Identify problems 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.

21 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.

22 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.

23 Common Biases and Errors

24 Common Biases and Errors
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 9/11 Prediction


26 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

27 Making Choices … Individual Differences
Errors Bounded Rationality Common Biases & Errors Intuition Personality Escalation of commitment Facets of Conscientiousness Achievement Striving Forestall failure Dutifulness Best for the organization Self serving bias High self esteem Gender Rumination Analyzing decision Over-thinking Age

28 Organizational Constraints
Decision makers make action choices that are favored by the organization Managers’ Decisions Performance Evaluation (Evaluation criteria) Division manager Vs. Negative information Reward Systems Risk aversion at GM (Low profile managers) Formal Regulations Rules and policies limit the alternative- Franchise System-imposed Time Constraints Deadlines- New product development Historical Precedents Past decisions influence current decisions- Budget

29 Ethics in Decision Making
Utilitarianism- Outcomes and consequences Seeking the greatest good for the greatest number Maximizing profit- firing decision (Questionable!) Rights Respecting and protecting basic rights of individuals Protecting Whistle blowers Justice Imposing/enforcing rules fairly and impartially. Equitable distribution of benefits and cost

30 Ways to Improve Decision Making
Analyze situation and adjust decision Be aware of biases- limit their impact. Rational analysis with intuition –effective Enhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogies Reducing Bias and Errors Novel and Useful Idea

31 Reducing Bias and Errors
Focus on goals. Clear goals Decision making easier Eliminate options inconsistent w/interests Look for information that disconfirms beliefs Considering ways we could be wrong we’re smarter than we actually are Don’t try create meaning off randomness/coincidence Increase your options. Number and diversity Be Creative

32 The Three Components of Creativity

33 Chapter Check-Up: Perception
It’s your little sister’s senior school party, and she notices that everyone is wearing the same dress she has on! Which perceptual shortcut may be occurring? Escalation of commitment Representative bias Availability Bias Hindsight Bias Availability Bias

34 Chapter Check-Up: Perception
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. Diversity Training

35 Decision Making … Example
Rashid 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. when you can take each class again costs and benefits for taking each this semester versus later next year. He then makes his decision. You just engaged in _____________________ ?

36 IOA- C5 July 4-5

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