1. Individual Decision Making5
Perception and
Individual Decision Making

2. Perception
Perception: The process by which individuals select, organize, and interpret the input from their senses.
Schemas, motivational state, and mood all play a part in perception.

3. Components of Perception
Perceiver: The person trying to interpret some observation that he or she has just made.
Target: Whatever the perceiver is trying to make sense of.
Situation: The context in which the perception takes place.

4. FIGURE 4.2 Characteristics of the Perceiver That Affect Perception

5. Schemas
Schemas: Abstract knowledge structures that are stored in memory and make possible the organization and interpretation of information about targets of perception.

6. Motivational State and Mood
Motivational State: The needs, values, and desires of a perceiver at the time of perception.
Mood: How a perceiver feels at the time of perception.

7. Characteristics of the Target and the Situation
Ambiguity
Social Status
Motion
Size
SITUATION:
Salience
novel
standing out
inconsistent with expectations

8. Salience
The extent to which a target of perception stands out in a group of people or things. Causes might be:
Being novel
Standing out
Being Inconsistent with Expectations

9. Perception Biases and Problems
Primacy Effects*
Contrast Effects
Halo Effect
Similar-to-me Effects*
Harshness, Leniency, and Average Tendency Biases*
Knowledge-of-Predictor Bias*
Selective Perception
Projection
Stereotyping

10. Primacy Effects
The initial pieces of information that a perceiver has about a target have an inordinately large effect on the perceiver’s perception and evaluation of the target.
For example, interviewers decide in the first few minutes whether or not a job candidate is a good prospect.

11. Contrast Effects
The perceiver’s perceptions of others distort the perceiver’s perception of a target.
For example, a manager’s perception of an average subordinate is likely to be lower if that subordinate is in a group with very high performers rather than in a group with very low performers.

12. Halo Effect
The perceiver’s general impression of a target distorts his or her perception of the target on specific dimensions.
For example, a subordinate who has made a good overall impression on a supervisor is rated as performing high-quality work and always meeting deadlines even when work is flawed.

13. Similar-to-Me Effects
People perceive others who are similar to themselves more positively than they perceive those who are dissimilar.
For example, supervisors rate subordinates who are similar to them more positively than they deserve.

14. Harshness, Leniency, and Average Tendency Biases
Some perceivers tend to be overly harsh in their perceptions, some overly lenient. Others view most targets as being about average.
For example, some supervisors give nearly everyone a poor rating, some give nearly everyone a good rating, and others give mostly average ratings.

15. Knowledge-of-Predictor Bias
Knowing how a target stands on a predictor of performance influences perceptions of the target.
For example, a professor perceives a student more positively than she deserves because the professor knows the student had a high score on the SAT.

16. Selective Perception
selectively interpret what see based on own interests, background, experience, and attitudes.

17. Projection
attribute own characteristics to others.

18. Stereotyping
judge someone on the basis of the perception of the group to which they belong instead of their own characteristics.

19. Definition
Attribution Theory: A group of theories that describe how people explain the causes of behavior.

20. FIGURE 4.3 Types of Attributions

21. Sources of Information
Internal attribution if
low consensus,
low distinctness,
high consistency
External attribution if
high consensus,
high distinctness,

22. Theory and Individual Behavior
Attribution
of Cause
Interpretation
Observation
Theory and
Individual
Behavior
External
Internal
Distinctiveness
Consensus
Consistency
High
Low
Prentice Hall, 2001

23. Attributional Biases
Fundamental attribution error - the tendency to overattribute behavior to internal rather than external causes.
Actor-observer effect - the tendency to attribute the behavior of others to internal causes and to attribute one’s own behavior to external causes.

24. Attributional Bias Self-serving attribution - the tendency to:
perceive own success as internal and failures as external.
perceive others success as external, and failure as internal
take credit for successes and avoid blame for failures.

25. Definition
Decision Making: The process by which members of an organization choose a specific course of action to respond to both problems and opportunities.

26. The Decision-Making Process
Rational Model of Decision Making
Bounded Rationality
Intuitive Model

27. Rational Model of Decision Making
A prescriptive approach based on the assumptions that the decision maker has all the necessary information and will choose the best possible solution or response.

28. Rational Model of Decision Making
Problem
Identify and
Define Problem
Develop
Alternatives A1 A2 A3 A4 An
Evaluate +
Criteria
Weight
the Criteria
T E C H
Set Decision
Choice
Make Optimal
Decision
Prentice Hall, 2001

29. Assumptions of the Rational Model
Problem clarity.
Known options.
Clear preferences.
Constant preferences.
No time or cost constraints.
People choose maximum payoff.
People have very high computational abilities

30. Bounded Rationality
Bounded Rationality: People’s ability to reason is constrained by the limitations of the human mind itself. If a problem is too complicated people simplify it and use satisficing
Satisficing: Searching for and choosing the first acceptable response or solution, not necessarily the best possible one.

31. Intuitive Model
an unconscious process created out of distilled experience.
intuition is often based on accumulated experiences which allow one to recognize patterns.
Main problem: since the criteria are not open to examination, intuition is often strongly influenced by perceptual biases.

32. Intuitive Decision Making most common under conditions of
High uncertainty levels
Little precedent
Hard to predictable variables
Limited facts
Unclear sense of direction
Analytical data is of little use
Several plausible alternatives
Time constraints
Prentice Hall, 2001

33. Sources of Error in Decision Making
Perceptual Biases
Heuristics
Availability
Representitiveness
Anchoring
Escalation of Commitment

34. Heuristics:
Rules of thumb that simplify decision making.

35. FIGURE 14.2 Heuristics and the Biases They May Lead To

36. Availability Heuristic
The rule of thumb that says an event that is easy to remember is likely to have occurred more frequently than an event that is difficult to remember.
Potential bias is overestimating the frequency of vivid, extreme, or recent events and causes.

37. Availability Biases Vividness and Recency
individuals judge events that are easier to remember to be more numerous than events that are difficult to remember

38. Representativeness Heuristic
The rule of thumb that says similar kinds of events that happened in the past are a good predictor of the likelihood of an upcoming event.
Potential bias is failure to take into account base rates and overestimating the likelihood of rare events.

39. Representativeness Biases
Insensitivity to base rates
individuals tend to ignore base rates in assessing the likelihood of events when other descriptive information is present, even if that other information is irrelevant

40. Anchoring and Adjustment Heuristic
The rule of thumb that says that decisions about how big or small an amount should be can be made by making adjustments from some initial amount.
Potential bias is inappropriate decisions when initial amounts are too high or too low.

41. Anchoring and Adjustment Biases
Insufficient anchor adjustment
individuals make estimates for values based on some initial value, even when the initial value is irrelevant
Overconfidence
individuals tend to be overconfident of the infallibility of their judgements when answering difficult questions

42. One Additional Biases Hindsight Bias
after finding out the correct outcome of an event, individuals tend to overestimate the extent to which they would have predicted that outcome

43. Escalation of Commitment
Increased commitment to a previous decision in spite of negative information
The tendency to invest additional time, money, or effort into what are essentially bad decisions or unproductive courses of action.

44. The Three Components of Creativity
Expertise
Creativity
Task
Motivation
Creativity
Skills
Prentice Hall, 2001

45. Decision-Making Styles Tolerance for Ambiguity
High
Analytic
Conceptual
Tolerance for Ambiguity
Directive
Behavioral
Low
Rational
Way of Thinking
Intuitive
Prentice Hall, 2001

46. Organizational Constraints
Performance
Evaluation
Reward
System
Organizational Constraints
Programmed
Routines
Historical
Precedents
Prentice Hall, 2001