PERCEPTION AND INDIVIDUAL DECISION MAKING

PERCEPTION AND INDIVIDUAL DECISION MAKING

1. PERCEPTION

   • Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment
   • 3 Factors That Influence Perception
     • Factors in the perceiver
       • • Attitudes
       • • Motives
       • • Interests
       • • Experiences
       • • Expectations
     • Factors in the situation
       • • Social setting
       • • Work setting
       • •Time
     • Factors in the target
       • •Similarity
       • • Proximity
       • •Background
       • • Size
       • • Sounds
       • • Novelty
       • • Motion

2. PERSON PERCEPTION: MAKING JUDGEMENT ABOUT OTHERS

   • Attribution Theory
     • Definition: Attribution Theory is an attempt to determine whether an individual’s behavior is internally or externally caused.
     • 3 Determinant of Attribution
       • Distinctiveness
       • Consensus
       • Consistency
     • Fundamental attribution: underestimate the influence of external factors and over estimate the influence of personal factors
     • Self-serving bias: attribute our own success to internal factors or failure to external factors
   • Shortcut in judging others
     • Selective Perception
     • Halo Effect
     • Contrast Effect
     • Stereotyping
   • Applications of shortcuts in organization
     • Employment Interview
     • Performance Expectation
       • self-fulfilling prophecy
     • Performance Evaluation

3. THE LINK BETWEEN PERCEPTION & INDIVIDUAL DECISION MAKING

   • The way individuals make decisions and the quality of their choices are largely influenced by their perceptions.
   • Perceptual process will affect the final outcome

4. DECISION MAKING IN ORGANIZATION

   • Common biases and errors
     • Bias
       • Confirmation Bias: the tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgements.
       • Anchoring Bias: A tendency to fixate on initial information, from which one then fails to adequately adjust for subsequent information
       • Availability Bias: The tendency for people to base their judgements on information that is readily available to them
       • Hindsight Bias: The tendency to believe falsely, after an outcome of an event is actually known, that one would have accurately predicted that outcome
     • Errors
       • Escalation of commitment: Increased commitment to a previous decision in spite of negative information
       • Randomness error: the tendency of individuals to believe that they can predict the outcome of random events.
       • Risk Aversion: The tendency to believe falsely, after an outcome of an event is actually known, that one would have accurately predicted that outcome
   • 3 Three decision making models
     • Rational Models: number of assumptions, completed information, able to identify all the relevant options in an unbiased manne.
     • Bounded rational model: extracts the essential features from problems without capturing all their complexity.
     • Intuition decision making: an unconscious process, distilled experience; outside conscious thought; holistic associations; engages the emotions.

5. INFLUENCE ON DECISION MAKING: INDIVIDUAL DIFFERENCES & ORGANIZATIONAL CONTRAINTS

   • Individual Differences
     • Personality
       • Self-esteem
         • High self-esteem are strongly motivated to maintain it -> use the self-serving bias to preserve it
         • Blame others for their failures while taking credit for successes
       • Conscientiousness
         • Dutiful people
           • More inclined to do what they see as best for the organization
           • Less likely to escalate their commitment
         • Achievement–Striving
           • Appear more susceptible to the hindsight bias
           • More likely to escalate their commitment, hate to fail
     • Gender: women analyze decisions more than men -> more likely than men to engage in rumination
     • Mental Ability: people with higher levels of mental ability ->less susceptible to common decision errors
     • Cultural differences
       • The preference for collective decision-making
       • The belief in the ability of people to solve problems
       • Time orientation
       • The importance of rationality
   • Organizational Constraints
     • Historical Precedents
     • System Imposed Time Constraints: deadline
     • ​​Formal Regulations
     • Reward Systems: what choices are preferable in terms of personal payoff
     • Performance Evaluations: criteria by which they are evaluated

6. SUMMARY & IMPLICATION FOR MANAGER

   • Implication
     • Combine rational analysis with intuition. Don’t assume that your specific decision style is appropriate for every job
     • Analyze the situation
     • Be aware of biases
     • Use creativity-stimulation techniques
   • Individual Decision Making
     • What individuals perceive from their work situation will influence their productivity
     • Under some decision situations, people follow the rational decision-making model
   • Perception
     • Absenteeism, turnover, and job satisfaction are also reactions to the individual’s perceptions.
     • What individuals perceive from their work situation will influence their productivity
     • Not on the way their external environment. On what they see or believe it to be

7. ETHICS IN DECISION MAKING

   • Improving Creativity in Decision Making
     • Creativity: The ability to produce novel and useful ideas
     • The Component Model of Creativity
       • Expertise
       • Creative-Thinking Skills
       • Intrinsic Task Motivation
     • International difference
       • Global companies need global standards for managers
       • Black and White/Grey
       • No global ethical standards exist
   • Three ethical decision-criteria
     • Impose and enforce rules fairly and impartially to ensure or an equitable distribution of benefits and costs.
     • Focus on rights —calls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents
     • Utilitarian criterion — decisions are made solely on the basis of their outcomes or consequences.