Chapter 6 Perception and Individual Decision Making Page
CHAPTER 6
Perception and Individual
Decision Making
LEARNING OBJECTIVES
After studying this chapter, your students should be able to:
6-1. Explain the factors that influence perception.
6-2. Describe attribution theory.
6-3. Explain the link between perception and decision making.
intuition.
decision making.
6-6. Contrast the three ethical decision criteria.
6-7. Describe the three-stage model of creativity.
INSTRUCTOR RESOURCES
Instructors may wish to use the following resources when presenting this chapter.
Text Exercises
Career OBjectives: So What If I’m A Few Minutes Late to Work?
Myth or Science?: “All Stereotypes Are Negative”
An Ethical Choice: Choosing to Lie
MyLab Management
Personal Inventory Assessments: Creativity Scale
Watch It!: Orpheus Group Casting: Social Perceptions and Attributes
Try It!: Perception & Individual Decision Making
Point/Counterpoint: Implicit Assessment
Questions for Review
Experiential Exercise: Mafia
Ethical Dilemma: Cheating Is A Decision
Text Cases
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Case Incident 1: Collaboration Overload
Case Incident 2: Feeling Bored Again
Instructor’s Choice
This section presents an exercise that is NOT found in the student’s textbook. Instructor’s
Choice reinforces the text’s emphasis through various activities. Some Instructor’s
Choice activities are centered on debates, group exercises, Internet research, and student
experiences. Some can be used in class in their entirety, while others require some
additional work on the student’s part. The course instructor may choose to use these at
any time throughout the class—some may be more effective as icebreakers, while some
may be used to pull together various concepts covered in the chapter.
Web Exercises
and ideas for researching OB topics on the Internet. The exercises “Exploring OB Topics
on the Web” are set up so that you can simply photocopy the pages, distribute them to
your class, and make assignments accordingly. You may want to assign the exercises as
an out-of-class activity or as lab activities with your class.
Summary and Implications for Managers
Individuals base their behavior not on the way their external environment actually is, but
rather on the way they see it or believe it to be. An understanding of the way people
make decisions can help us explain and predict behavior, but few important decisions are
simple or unambiguous enough for the rational model’s assumptions to apply. We find
individuals looking for solutions that satisfice rather than optimize, injecting biases and
prejudices into the decision process, and relying on intuition. Managers should encourage
creativity in employees and teams to create a route to innovative decision making.
Specific implications for managers are below:
Behavior follows perception, so to influence behavior at work, assess how people
perceive their work. Often behaviors we find puzzling can be explained by
understanding the initiating perceptions.
Make better decisions by recognizing perceptual biases and decision-making
errors we tend to commit. Learning about these problems doesn’t always prevent
us from making mistakes, but it does help.
Adjust your decision-making approach to the national culture you’re operating in
and to the criteria your organization values. If you’re in a country that doesn’t
value rationality, don’t feel compelled to follow the rational decision-making
model or to try to make your decisions appear rational. Adjust your decision
approach to ensure compatibility with the organizational culture.
Combine rational analysis with intuition. These are not conflicting approaches to
decision making. By using both, you can actually improve your decision making
effectiveness.
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Try to enhance your creativity. Actively look for novel solutions to problems,
attempt to see problems in new ways, use analogies, and hire creative talent. Try
to remove work and organizational barriers that might impede your creativity.
This chapter begins with an introduction to the ethics of decision making in non-profit organizations The
cases of the Healing Arts Initiative and the Wounded Warrior Project illustrate how pervasive, impactful,
and tricky ethical decision making is within organizations. As we will see later in the chapter,
ethical-decision making hinges on several criteria and can be fostered through many means. To better
understand what influences us and our organizations, we start at the roots of our thought processes: our
perceptions and the way they affect our decision making.
BRIEF CHAPTER OUTLINE
I. What Is Perception?
A. Perception is a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment.
B. Why is this important to the study of OB?
1. Because people’s behavior is based on their perception of what reality is, not
on reality itself.
II. Factors That Influence Perception (Exhibit 6-1)
A. Factors that shape and can distort perception:
1. Perceiver
2. Target
3. Situation
individual perceiver.
C. Characteristics of the target also affect what we perceive.
D. Context matters too.
III. Person Perception: Making Judgments about Others
A. Attribution Theory (Exhibit 6-2)
1. Attribution theory suggests that when we observe an individual’s behavior,
determination depends largely on three factors:
a) Distinctiveness
b) Consensus
c) Consistency
2. Clarification of the differences between internal and external causation:
personal control of the individual.
b) Externally caused behavior is what we imagine the situation forced the
individual to do.
3. Three determining factors:
in different situations.
b) Consensus occurs if everyone who is faced with a similar situation
responds in the same way.
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c) Consistency in a person’s actions.
4. Fundamental attribution error
personal factors.
5. Self-serving bias
failure on external factors, such as luck.
6. Cultural differences
a) The evidence on cultural differences in perception is mixed, but most
suggest there are differences across cultures in the attributions people
make.
B. Common Shortcuts in Judging Others
1. The shortcuts for judging others often allow us to make accurate perceptions
rapidly and provide valid data for making predictions.
2. However, they can and do sometimes result in significant distortions.
3. Selective perception
a) Any characteristic that makes a person, object, or event stand out will
increase the probability that it will be perceived.
b) Since we can’t observe everything going on about us, we engage in
selective perception.
4. Halo and Horns Effect
a) The halo effect occurs when we draw a general impression on the basis of
a single characteristic. The horns effect, on the other hand, is when we
draw a negative impression from a single characteristic.
5. Contrast Effects
a) We do not evaluate a person in isolation. Our reaction to one person is
influenced by other persons we have recently encountered.
b) Contrast effect can distort perception.
i. For example, an interview situation in which one sees a pool of job
applicants can distort perception.
6. Stereotyping
a) Stereotyping—judging someone on the basis of our perception of the
group to which he or she belongs.
b) One problem of stereotypes is that they are widespread generalizations,
though they may not contain a shred of truth when applied to a particular
person or situation.
C. Specific Applications of Shortcuts in Organizations
1. Employment Interview
a) Evidence indicates that interviewers make perceptual judgments that are
often inaccurate.
b) Interviewers generally draw early impressions that become very quickly
entrenched.
c) Studies indicate that most interviewers’ decisions change very little after
the first four or five minutes of the interview.
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D. Performance Expectations
1. Evidence demonstrates that people will attempt to validate their perceptions of
reality, even when those perceptions are faulty.
2. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that
people’s expectations determine their behavior. Expectations become reality.
E. Performance Evaluation
1. An employee’s performance appraisal is very much dependent on the
perceptual process.
2. Although the appraisal can be objective, many jobs are evaluated in subjective
terms.
3. Subjective measures are problematic because of selective perception, contrast
effects, halo effects, and so on.
IV. The Link Between Perception and Individual Decision Making
A. Individuals in organizations make decisions; they make choices from among two
or more options.
1. Decision making occurs as a reaction to a problem. A discrepancy between
V. Decision Making in Organizations
A. The Rational Model, Bounded Rationality, and Intuition
1. Introduction
a) In OB, there are generally accepted constructs of decision making that
each of us employs to make determinations: rational decision making,
bounded rationality, and intuition.
another in a given situation.
2. Rational decision making
a) We often think the best decision maker is rational and makes consistent,
value-maximizing choices within specified constraints.
b) These decisions follow a six-step rational decision making model listed
in Exhibit 6-3
i. Step 1: Define the problem.
ii. Step 2: Identify the decision criteria.
iii. Step 3: Allocate weights to the criteria.
iv. Step 4: Develop the alternatives.
v. Step 5: Evaluate the alternatives.
vi. Step 6: Select the best alternative.
B. Bounded Rationality
1. When faced with a complex problem, most people respond by reducing the
problem to a level at which it can be readily understood.
a) People satisfice—they seek solutions that are satisfactory and sufficient.
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3. How does bounded rationality work?
a) Once a problem is identified, the search for criteria and options begins.
b) The decision maker will identify a limited list made up of the more
conspicuous choices, which are easy to find and tend to be highly visible,
and they will represent familiar criteria and previously tried-and-true
solutions.
acceptable level of performance.
i. Thus ends our search. Therefore, the solution represents a satisficing
choice—the first acceptable one we encounter—rather than an optimal
one.
d) To use the rational model in the real world, you need to gather a great deal
bounded by our duties toward the people our actions affect.
i. Researchers have identified many ways in which the automatic effects
of our bounded rationality can be circumvented in an ethical context:
be sure to triangulate on the focal issue by asking multiple questions,
C. Intuition
1. Perhaps the least rational way of making decisions is intuitive decision
making, an unconscious process created from distilled experience.
2. It occurs outside conscious thought; it relies on holistic associations, or links
between disparate pieces of information; is fast; and is affectively charged,
meaning it usually engages the emotions.
complement each other.
5. The key is to neither abandon nor rely solely on intuition, but to supplement it
with evidence and good judgment.
VI. Common Biases and Errors in Decision Making
A. Introduction (Exhibit 6-4)
judgments.
2. People tend to rely on experience, impulses, gut feelings, and rules of thumb.
These can lead to distortions.
B. Overconfidence Bias
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b) Investors, especially novices, overestimate not just their own skill in
processing information, but also the quality of the information they’re
working with.
C. Anchoring Bias
D. Confirmation Bias
1. Confirmation bias is a type of selective perception: we seek out information
that reaffirms past choices, and discount information that contradicts past
judgments.
E. Availability Bias
that is readily available.
F. Escalation of Commitment
1. Escalation of commitment occurs when we stay with a decision even when
there is clear evidence that it’s wrong.
2. When is escalation most likely to occur?
responsible for the outcome.
G. Randomness Error
1. Decision making becomes impaired when we try to create meaning out of
random events.
2. Our tendency to believe we can predict the outcome of random events is the
randomness error.
H. Risk Aversion
aversion.
2. Overall, the framing of a decision has an effect on whether or not people will
engage in risk aversive behavior—when decisions are framed positively, such
as a potential gain of $50, people will be more risk averse (conversely, when
the decision is framed in a negative manner, such as a loss of $50, people will
engage in riskier behaviors).
less likely to leave the organization.
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3. People will more likely engage in risk-seeking behavior for negative
I. Hindsight Bias
1. Hindsight bias is the tendency to believe, falsely, that one has accurately
predicted the outcome of an event, after that outcome is actually known.
2. The hindsight bias reduces our ability to learn from the past.
VII. Influences on Decision Making: Individual Differences and Organizational
Constraints
A. Individual Differences
1. Personality influences our decisions.
may affect escalation of commitment.
i Achievement-striving
ii Dutifulness
b) People with high self-esteem are strongly motivated to maintain it, so they
use the self-serving bias to preserve it.
2. Gender
over-thinking about problems.
b) Evidence indicates that women analyze decisions more than men.
3. Mental ability
a) We know people with higher levels of mental ability are able to process
information more quickly, solve problems more accurately, and learn
decision errors.
4. Cultural differences
a) The rational model makes no acknowledgment of cultural differences, nor
does the bulk of OB research literature on decision making.
b) We need to recognize that the cultural background of a decision maker can
collectively in groups.
c) Cultures differ in their time orientation, the importance of rationality, their
belief in the ability of people to solve problems, and their preference for
collective decision making.
d) While rationality is valued in North America, that’s not true elsewhere in
the world.
accepting situations as they are.
f) Because problem-solving managers believe they can and should change
situations to their benefit, U.S. managers might identify a problem long
before their Thai or Indonesian counterparts would choose to recognize it.
g) Decision making by Japanese managers is much more group-oriented than
in the United States.
B. Organizational Constraints
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1. Introduction
from the rational model.
2. Performance Evaluation Systems
a) Managers are strongly influenced in their decision making by the criteria
by which they are evaluated.
3. Reward Systems
payoff.
4. Formal Regulations
a) Organizations create rules, policies, procedures, and other formalized
regulations to standardize the behavior of their members.
5. System-Imposed Time Constraints
a) Organizations impose deadlines on decisions.
6. Historical Precedents
a) Decisions have a context. Individual decisions are more accurately
characterized as points in a stream of decisions.
b) Decisions made in the past are ghosts that continually haunt current
choices. It is common knowledge that the largest determining factor of the
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