HND – 6. Perception & Individual Decision Making

1. HND – 6. Perception & Individual Decision Making Lim SeiKee @ cK

2. Perception A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. • People’s behavior is based on their perception of what reality is, not on reality itself.

3. Perception • Perception is the process by which individuals make sense of their world. • Individuals may look at the same thing, yet perceive it differently. • Differences in perceptions can cause problems • Communication • Conflict • Motivation • Judgment • Decision Making

4. 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

5. Making Judgments About Others Attribution Theory When individuals observe behavior, they attempt to determine whether it is internally or externally caused. 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.

6. Attribution Theory Suggests that perceivers try to “attribute” the observed behavior to a type of cause: • Internal – behavior is believed to be under the personal control of the individual • External –the person is forced into the behavior by outside events/causes

8. Errors and Biases in Attributions • 1. 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. • The tendency to attribute others' bad performance to internal causes & Attribute their good performance to external causes

9. Errors and Biases in Attributions • 2. Self-serving bias • The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors. • attribute successes to ourselves – internal • attribute failures to the environment – external

10. Shortcuts in judging others • Selective perception • Halo effect • Contrast effect • Projection • Stereotyping

11. Frequently Used Shortcuts in Judging Others Selective Perception People selectively interpret what they see on the basis of their interests, background, experience, and attitudes.

12. Frequently Used Shortcuts in Judging Others Halo Effect Drawing a general impression about an individual on the basis of a single characteristic Contrast Effects Evaluation of a person’s characteristics that are affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics

13. Frequently Used Shortcuts in Judging Others Stereotyping Judging someone on the basis of one’s perception of the group to which that person belongs Projection Attributing one’s own characteristics to other people

14. The Link Between Perceptions and Individual Decision Making ProblemA perceived discrepancy between the current state of affairs and a desired state. Perception of the decision maker DecisionsChoices made from among alternatives developed from data perceived as relevant. Outcomes

15. 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.

16. Assumptions of the Rational Decision-Making Model Rational Decision-Making Model Describes how individuals should behave in order to maximize some outcome. • Model Assumptions • Problem clarity • Known options • Clear preferences • Constant preferences • No time or cost constraints • Maximum payoff

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.

18. Creativity in Decision Making The ability to produce novel and useful ideas • Helps people to: • Better understand the problem • See problems others can’t see • Identify all viable alternatives • Identify alternatives that aren’t readily apparent

19. Three-Component Model of Creativity

20. 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

21. How Are Decisions Actually Made in Organizations Bounded Rationality Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.

22. Decision Making in Bounded Rationality Simpler than rational decision making, composed of three steps: • Limited search for criteria and alternatives – familiar criteria and easily found alternatives • Limited review of alternatives – focus alternatives, similar to those already in effect • Satisficing – selecting the first alternative that is “good enough”

23. Common Biases and Errors • Overconfidence bias • Anchoring bias • Confirmation bias • Availability bias • Representative bias • Escalation of Commitment bias • Randomness Error • Hindsight bias

24. Overconfidence bias; Anchoring bias • Overconfidence Bias • Believing too much in our own ability to make good decisions • ‘no problem in judgment and decision making’ • Anchoring Bias • Using early, first received information as the basis for making subsequent judgments • a tendency to fixate on initial information as a starting point.

25. Confirmation bias; Availability bias • Confirmation Bias • Using only the facts that support our decision • 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 • Using information that is most readily at hand • the tendency for people to base their judgments on information that is readily available to them

26. Representative bias; Escalation of Commitment bias • Representative Bias • Assessing the likelihood of an occurrence by trying to match it with a preexisting category using only the facts that support our decision • Escalation of Commitment • In spite of new negative information, commitment actually increases • Increasing commitment to a previous decision in spite of negative information.

27. Randomness Error; Hindsight bias • Randomness Error • Creating meaning out of random events • difficulty dealing with chance. • Hindsight Bias • Looking back, once the outcome has occurred, and believing that you accurately predicted the outcome of an event • Hindsight = ability to see, after the event, what should have been done

28. Intuitive Decision Making • An non-conscious process created out of distilled experience • Increases with experience • Can be a powerful complement to rational analysis in decision making

29. Intuition • 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

30. 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

31. Decision-Style Model Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.

32. Ethics in Decision Making • Ethical Decision Criteria • Utilitarianism • Seeking the greatest good for the greatest number. • Rights • Respecting and protecting basic rights of individuals such as whistleblowers. • Justice • Imposing and enforcing rules fairly and impartially.

33. Ethical Decision Criteria • @ Utilitarianism • √ Promotes efficiency and productivity • X Sideline the rights of some individuals • @ Rights • √ Protects individuals from injury and is consistent with freedom and privacy • X It can create a legalistic environment that hinders productivity and efficiency

34. Ethical Decision Criteria • @ Justice • √ Protects the interests of the underrepresented and less powerful • X It encourages a sense of entitlement that reduces risk taking, innovation, and productivity