5–2After studying this chapter,you should be able to:1. Explain how two people can see the samething and interpret it differently.2. List three determinants of attribution.3. Describe how shortcuts can assist in or distortour judgment of others.4. Explain how perception affects the decision-making process.5. Outline the six steps in the rational decision-making model.LEARNINGOBJECTIVES
5–3After studying this chapter,you should be able to:6. Describe the actions of a boundedly rationaldecision maker.7. Identify the conditions in which individuals aremost likely to use intuition in decision making.8. Describe four styles of decision making.9. Define heuristics and explain how they biasdecisions.10.Contrast the three ethical decision criteria.LEARNINGOBJECTIVES(cont’d)
5–4What Is Perception, and Why Is It Important?What Is Perception, and Why Is It Important?• People’s behavior isPeople’s behavior isbased on theirbased on theirperception of whatperception of whatreality is, not onreality is, not onreality itself.reality itself.• The world as it isThe world as it isperceived is the worldperceived is the worldthat is behaviorallythat is behaviorallyimportant.important.• People’s behavior isPeople’s behavior isbased on theirbased on theirperception of whatperception of whatreality is, not onreality is, not onreality itself.reality itself.• The world as it isThe world as it isperceived is the worldperceived is the worldthat is behaviorallythat is behaviorallyimportant.important.PerceptionA process by whichindividuals organize andinterpret their sensoryimpressions in order togive meaning to theirenvironment.
5–5Factors ThatInfluencePerceptionFactors ThatInfluencePerceptionE X H I B I T 5–1E X H I B I T 5–1
5–6Person Perception: Making Judgments AboutOthersPerson Perception: Making Judgments AboutOthersDistinctiveness: shows different behaviors in different situations.Consensus: response is the same as others to same situation.Consistency: responds in the same way over time.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.Attribution TheoryWhen individuals observebehavior, they attempt todetermine whether it isinternally or externallycaused.
5–7Attribution TheoryAttribution TheoryE X H I B I T 5–2E X H I B I T 5–2
5–8Errors and Biases in AttributionsErrors and Biases in AttributionsFundamental Attribution ErrorThe tendency to underestimatethe influence of external factorsand overestimate the influenceof internal factors when makingjudgments about the behavior ofothers.
5–9Errors and Biases in Attributions (cont’d)Errors and Biases in Attributions (cont’d)Self-Serving BiasThe tendency for individuals toattribute their own successesto internal factors while puttingthe blame for failures onexternal factors.
5–10Frequently Used Shortcuts in Judging OthersFrequently Used Shortcuts in Judging OthersSelective PerceptionPeople selectively interpret what they see on thebasis of their interests, background, experience,and attitudes.
5–11Frequently Used Shortcuts in Judging OthersFrequently Used Shortcuts in Judging OthersHalo EffectDrawing a general impressionabout an individual on thebasis of a single characteristicContrast EffectsEvaluation of a person’s characteristics thatare affected by comparisons with otherpeople recently encountered who rank higheror lower on the same characteristics.
5–12Frequently Used Shortcuts in Judging OthersFrequently Used Shortcuts in Judging OthersProjectionAttributing one’s owncharacteristics to otherpeople.StereotypingJudging someone on thebasis of one’s perception ofthe group to which thatperson belongs.
5–13Specific Applications in OrganizationsSpecific Applications in Organizations Employment Interview– Perceptual biases of raters affect the accuracy ofinterviewers’ judgments of applicants. Performance Expectations– Self-fulfilling prophecy (pygmalion effect): The lower orhigher performance of employees reflectspreconceived leader expectations about employeecapabilities. Ethnic Profiling– A form of stereotyping in which a group of individuals issingled out—typically on the basis of race or ethnicity—for intensive inquiry, scrutinizing, or investigation.
5–14Specific Applications in Organizations (cont’d)Specific Applications in Organizations (cont’d) Performance Evaluations– Appraisals are often the subjective (judgmental)perceptions of appraisers of another employee’s jobperformance. Employee Effort– Assessment of individual effort is a subjectivejudgment subject to perceptual distortion and bias.
5–15The Link Between Perceptions and IndividualDecision MakingThe Link Between Perceptions and IndividualDecision MakingPerceptionof thedecisionmakerPerceptionof thedecisionmakerOutcomesProblemA perceived discrepancybetween the current state ofaffairs and a desired state.DecisionsChoices made from amongalternatives developed fromdata perceived as relevant.
5–16Assumptions of the Rational Decision-MakingModelAssumptions of the Rational Decision-MakingModelModel Assumptions• Problem clarity• Known options• Clear preferences• Constantpreferences• No time or costconstraints• Maximum payoffModel Assumptions• Problem clarity• Known options• Clear preferences• Constantpreferences• No time or costconstraints• Maximum payoffRational Decision-Making ModelDescribes howindividuals shouldbehave in order tomaximize someoutcome.
5–17Steps in the Rational Decision-Making ModelSteps in the Rational Decision-Making Model1. 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.E X H I B I T 5–3E X H I B I T 5–3
5–18The Three Components of CreativityThe Three Components of CreativityCreativityThe ability to producenovel and useful ideas.Three-ComponentModel of CreativityProposition that individualcreativity requires expertise,creative-thinking skills, andintrinsic task motivation.E X H I B I T 5–4E X H I B I T 5–4Source: T.M. Amabile, “Motivating Creativity in Organizations,” California Management Review, Fall 1997, p. 43.
5–19How Are Decisions Actually Made inOrganizationsHow Are Decisions Actually Made inOrganizationsBounded RationalityIndividuals make decisions by constructingsimplified models that extract the essentialfeatures from problems without capturing alltheir complexity.
5–20How Are Decisions Actually Made inOrganizations (cont’d)How Are Decisions Actually Made inOrganizations (cont’d) How/Why problems are identified– Visibility over importance of problem• Attention-catching, high profile problems• Desire to “solve problems”– Self-interest (if problem concerns decision maker) Alternative Development– Satisficing: seeking the first alternative that solvesproblem.– Engaging in incremental rather than unique problemsolving through successive limited comparison ofalternatives to the current alternative in effect.
5–21Common Biases and ErrorsCommon Biases and Errors Overconfidence Bias– Believing too much in our own decision competencies. Anchoring Bias– Fixating on early, first received information. Confirmation Bias– Using only the facts that support our decision. Availability Bias– Using information that is most readily at hand. Representative Bias– Assessing the likelihood of an occurrence by trying tomatch it with a preexisting category.
5–22Common Biases and ErrorsCommon Biases and Errors Escalation of Commitment– Increasing commitment to a previous decision in spiteof negative information. Randomness Error– Trying to create meaning out of random events byfalling prey to a false sense of control or superstitions. Hindsight Bias– Falsely believing to have accurately predicted theoutcome of an event, after that outcome is actuallyknown.
5–23IntuitionIntuition Intuitive Decision Making– An unconscious process created out of distilledexperience. Conditions Favoring Intuitive Decision Making– A high level of uncertainty exists– There is little precedent to draw on– Variables are less scientifically predictable– “Facts” are limited– Facts don’t clearly point the way– Analytical data are of little use– Several plausible alternative solutions exist– Time is limited and pressing for the right decision
5–24Decision-Style ModelDecision-Style ModelE X H I B I T 5–5E X H I B I T 5–5Source: A.J. Rowe and J.D. Boulgarides, Managerial DecisionMaking, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.
5–25Organizational Constraints on Decision MakersOrganizational Constraints on Decision Makers Performance Evaluation– Evaluation criteria influence the choice of actions. Reward Systems– Decision makers make action choices that are favoredby the organization. Formal Regulations– Organizational rules and policies limit the alternativechoices of decision makers. System-imposed Time Constraints– Organizations require decisions by specific deadlines. Historical Precedents– Past decisions influence current decisions.
5–26Cultural Differences in Decision MakingCultural Differences in Decision Making Problems selected Time orientation Importance of logic and rationality Belief in the ability of people to solve problems Preference for collect decision making
5–27Ethics in Decision MakingEthics in Decision Making Ethical Decision Criteria– Utilitarianism• Seeking the greatest good for the greatest number.– Rights• Respecting and protecting basic rights of individualssuch as whistleblowers.– Justice• Imposing and enforcing rules fairly and impartially.
5–28Ethics in Decision MakingEthics in Decision Making Ethics and National Culture– There are no global ethical standards.– The ethical principles of global organizations thatreflect and respect local cultural norms are necessaryfor high standards and consistent practices.
5–29Ways to Improve Decision MakingWays to Improve Decision Making1. Analyze the situation and adjust your decisionmaking style to fit the situation.2. Be aware of biases and try to limit their impact.3. Combine rational analysis with intuition toincrease decision-making effectiveness.4. Don’t assume that your specific decision style isappropriate to every situation.5. Enhance personal creativity by looking for novelsolutions or seeing problems in new ways, andusing analogies.
5–30Toward Reducing Bias and ErrorsToward Reducing Bias and Errors Focus on goals.– Clear goals make decision making easier and help toeliminate options inconsistent with your interests. Look for information that disconfirms beliefs.– Overtly considering ways we could be wrongchallenges our tendencies to think we’re smarter thanwe actually are. Don’t try to create meaning out of random events.– Don’t attempt to create meaning out of coincidence. Increase your options.– The number and diversity of alternatives generatedincreases the chance of finding an outstanding one.E X H I B I T 5–6E X H I B I T 5–6Source: S.P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Controlof Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), pp. 164–68.