Robbins & Judge

Organizational Behavior
14th Edition

Perception and Individual

Decision Making
Kelli J. Schutte
William Jewell College

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.

“We Don’t See Things As They Are, We

See Things As We Are.”

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 Perception
Perception means:
the ability to see, hear, or become aware of something through the senses.

➢ 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.
➢ The world as it is perceived is the world that is behaviorally
important.

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➢ “Perception refers to the interpretation of what we take in
through our senses.

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Factors that Influence Perception

See E X H I B I T 6-1

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 Person Perception: Making Judgement
About Others

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Attribution Theory: Judging Others
➢ Our perception and judgment of others behavior will be
significantly influenced by our assumptions about the other
person’s internal state.
– When individuals observe behavior,
a individual attempt to determine whether an
individual’s behavior is internally or externally
caused.
• Internal causes are under that personal control of individual
• External causes are not under the person’s control. What we
imagine the situation forced the individual to do.

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Causation judged through three factors:
– Distinctiveness
Displays different behavior in different situation.
• Employee who has come 10 mints late today, but
regularly show his commitment.-
• highly unusual behavior – External behavior
• Usual behavior- Internal

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Consensus
• Response is the same as others; to the same
situation
• If all employees take the same route to work all
are late, its external, but if only one person late all
done work on time then its his personal reason.
• High consensus means same everyone who is
facing similar situation is --------- External
• If different behavior everyone who is facing
similar situation--------internal
– .

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Consistency
– Responds in the same way over time
– A person coming 10 mints late for work is not
perceived as with the person who always come late.
– The person is regular, its his characteristics.
– The more consistent behavior the internally
attribute it is.
– Less consistent- external

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Elements of Attribution Theory

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Errors and Biases in Attributions
➢ 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
– We blame people first, not the situation

➢ Self-Serving Bias
– The tendency for individuals to attribute their own
successes to internal factors while putting the blame for
failures on external factors i.e bad luck or unproductive
coworkers.
– It is “our” success but “their” failure
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 Frequently Used Shortcuts in Judging Others
➢ Selective Perception
– People selectively interpret what one sees on the basis of their
interests, background, experience, and attitudes.
– If someone is looking for fitness tips, then that person will
ignore other ads.
➢ Halo Effect
– Drawing a general impression about an individual on the basis of
a single characteristic.
– i.e. : intelligent, social ability or appearance, skillful, practical,
industrious, determined and warm.
➢ 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
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Another Shortcut: Stereotyping
Judging someone on the basis of one’s perception of the
group to which that person belongs – a prevalent and
often useful, if not always accurate, generalization.
Stereotypes based on age, race, religion, ethnicity and even
weight.
Examples:
➢ Old worker cant learn new skills.
➢ Men are not interesting in child care.
Profiling
– A form of stereotyping in which members of a group are
singled out for intense scrutiny based on a single, often
racial, trait.

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 Specific Shortcut Applications in Organizations
➢ Employment Interview
– Perceptual biases of raters(interviewer) affect the accuracy of
interviewers’ judgments of applicants
– Formed in a single glance – 1/10 of a second!
➢ Performance Expectations
– Self-fulfilling prophecy (Pygmalion effect: phenomenon
whereby higher expectations lead to an increase in
performance.):
– The individuals behavior is determined by others expectations.
– The lower or higher performance of employees reflects
preconceived leader expectations about employee capabilities

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➢ Performance Evaluations
– Performance Evaluation depends on the perceptual process
to great extent.
– Employees future is closely tied on Appraisals-promotion,
pay raises and continuation of employment are often the
subjective (judgmental) perceptions of appraisers of another
employee’s job performance
– Critical impact on employees
– i.e. a salesman is appraised on the basis of how many dollars
he generate on his territory.

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Perceptions and Individual Decision Making
➢ Problem
– A perceived discrepancy between the current state of affairs and a
desired state
➢ Decisions
– Choices made from among two or more alternatives developed
from data
➢ Perception Linkage:
– One person’s problem is another’s satisfactory state of
affairs .
– Every decision require us to interpret and evaluate the
information.
– All elements of problem identification and the decision-
making process are influenced by perception.
• Problems must be recognized
• Data
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Decision-Making Models in Organizations
➢ Rational Decision Making
– The “perfect world” model: assumes complete information,
all options known, and maximum payoff
– Six-step decision-making process
➢ Bounded Reality
– The “real world” model: seeks satisfactory and sufficient
solutions from limited data and alternatives
➢ Intuition
– A non-conscious process created from distilled experience
that results in quick decisions
• Relies on holistic associations
• Affectively charged – engaging the emotions
See E X H I B I T 6-3

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➢ Rational Decision Making
– The best decision maker is rational and makes consistent,
value maximizing choices within specified constraint.

– The rational decision making model relies on the number

of its assumptions, including that the decision maker has :
– complete information and be able to identify all the
relevant options in an unbiased manner.

– The “perfect world” model: assumes complete information,

all options known, and maximum payoff.
– Six-step decision-making process

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 Six Step Rational Decision-Making Model

1. Define the problem.

2. Identify the decision criteria.
3. Allocate weights to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.

Seldom actually used: more of a goal than a

practical method

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1. Define the problem.
– We see many problems but don’t address everyone.
– It is difference between current state and expected state.
– People fail to identify causes of problems not the
symptoms.
– i.e home is so small, need to buy new house or maybe not
– Main problem is space.
– Options New room in house, free some space by placing
some thing in store room.

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1. Identify the decision criteria.
– Consist of specific standards that will guide our decision
making
– Maybe we ignore many factors
– Space is an issue,
– Need to generate some criteria that help us generate some
solution to our problem
– Cost, time, long term solution
– As problem is to buy house instead of sorting space issue.
– This will see all in different way as distance from school,
quality of school and some other activities.

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3. Allocate weights to the criteria.
– Weight these standars differently by comparing one criteria
with other criteria./ ranking system.
– Cost, time and long term

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Develop the alternatives.
– Generate a list of possible options.
– The more option we generate, the more options to select best
– Moving to Bigger house
– Utilizing a storage
– Moving items that are unnecessary
– Increase size of existing house.

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5. Evaluate the alternatives.

6. Select the best alternative.

– Choose the best alternative.

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 Bounded Rationality

➢ The limited information-processing capability of human beings

makes it impossible to assimilate and understand all the
information necessary to optimize

➢ Satisfice method-So people seek solutions that are satisfactory

and sufficient, rather than optimal (they “satisfice”)

➢ Bounded rationality is constructing simplified models that

extract the essential features from problems without capturing
all their complexity

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 How does Bounded Rationality work for
typical individual?
➢ Once identified problem
➢ Search for criteria and alternative, but the list will be less
complicated.
➢ Identify limited list of choices , both easy to find and
highly visible .
➢ Usually have familiar criteria and tried-and-true
solution.
➢ Review them but it will not be complicated process.
➢ Focus on alternatives that differ on relatively small degree
from the choice currently in effect.
➢ Solution represent a satisficing choice----- first acceptable
one we encounter- rather than optimal
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 Decision Making in Bounded Rationality

Simpler than rational decision making, composed of three

steps:

1. Limited search for criteria and alternatives – familiar criteria

and easily found alternatives
2. Limited review of alternatives – focus alternatives, similar to
those already in effect
3. Satisficing – selecting the first alternative that is “good enough”

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 Intuitive Decision Making
➢ A non-conscious process created from
distilled experience that results in quick
decisions
– Relies on holistic associations
– Affectively charged – engaging the
emotions
➢ Increases with experience
➢ Can be a powerful complement to rational
analysis in decision making

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Common Biases and Errors in Decision Making
➢ Overconfidence Bias
– Believing too much in our own ability to make good
decisions – especially when outside of own expertise
➢ Anchoring Bias
– Using early, first received information as the basis for
making later judgments
➢ Confirmation Bias
– Selecting and using only facts that support our decision
– Selectively gather the information.
➢ Availability Bias
– Emphasizing information that is most readily at hand
• Recent
• Vivid
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 More Common Decision-Making Errors
➢ Escalation of Commitment
– (staying with the decision) Increasing commitment to a
decision in spite of evidence that it is wrong – especially if
responsible for the decision!
➢ Randomness Error
– Tendency to predict the outcomes of random events
– Creating meaning out of random events – superstitions
– i.e. I never make important decision on 13.
➢ Winner’s Curse
A tendency for the winning bid in an auction to exceed the
intrinsic value or true worth of an item.
– Highest bidder pays too much due to value overestimation
– Likelihood increases with the number of people in auction

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➢ Hindsight Bias
– Tendency to predict falsely, After an outcome is already
known, believing it could have been accurately predicted
beforehand.
– Reduce ability to learn from the past
– Think that we are better predictor.

➢ Risk Aversion
– Tendency to prefer sure gain of moderated amount over a
riskier amount,
– Even if the riskier outcome might have higher payoff.

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Influence on Decision making

Individual differences and organizational

Constraints

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 Individual Differences in Decision Making
➢ Personality
– Specific facets Conscientiousness may effect escalation of
commitment
– Achievement strivers are likely to escalate their commitment
– Dutiful people are less likely to have this bias.
– As achievement oriented people hate to fail but dutiful
inclined to do best for their organization.
– achievement oriented have high hindsight bias, as they have
greater need to justify it
– Self-Esteem
• High self-esteem people are strongly motivated to maintain it.
• They are susceptible to self-serving bias(need to maintain and
enhance self-esteem, or the tendency to perceive oneself in an
overly favorable manner.)
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Gender
• Women analyze decisions more than men – rumination
• Overthinking the problem.
• Careful consideration of the problems and choices
• Overestimate the problem before making decisions and
rehash a decision once made
• Differences develop early- women are more empathetic
and affected by the events in others lives.

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➢ Mental Ability
High level of mental ability are able to process information
more quickly, solve problem more accurately and learn faster,
less susceptible to common decision errors.
➢ Fell prey to:
– Anchoring overconfidence
– Escalation of commitment

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 Organizational Constraints
➢ Performance Evaluation
– Managerial evaluation criteria influence actions
➢ Reward Systems
– Managers will make the decision with the greatest personal payoff
for them
➢ Formal Regulations
– Limit the alternative choices of decision makers by rules and
regulation
➢ System-Imposed Time Constraints
– Explicit deadlines- Restrict ability to gather or evaluate
information
➢ Historical Precedents
– Past decisions influence current decisions.
– Choices
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 Ethics in Decision Making
➢ Ethical Decision Criteria
– Utilitarianism
• Decisions made solely on the basis of outcome
• Seeking the greatest good for the greatest number
• Dominant method for businesspeople.
• Consistent with the goals such as efficiency, productivity and
high profits.
– Pro: Promotes efficiency and productivity
– Con: Can ignore individual rights, especially minorities.

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 Ethical Decision-Making Criteria Assessed
➢ Rights
• Decisions consistent with fundamental liberties and
privileges
• Respecting and protecting basic rights of individuals such as
whistleblowers
– Pro: Protects individuals from harm; preserves rights
– Con: Creates an overly legalistic work environment
➢ Justice
• Imposing and enforcing rules fairly and impartially to
• Ensure justice and Equitable distribution of benefits and costs
– Pro: Protects the interests of weaker members
– Con: Encourages a sense of entitlement (the fact of having a
right to something.)
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