It includes what is perception and how it affects the individual decision making.

1. PERCEPTION AND
INDIVIDUAL DECISION
MAKING

2. What is perception and why is it important?
• Perception : A process by which an 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 reality
itself.
• The world as it is perceived is the world that is behaviorally important.

3. Factors That Influence Perception:

4. Person Perception : Making Judgements About
Others
• Attribution theory : When people observe behavior , they attempt to
determine if it is internally or externally caused.
• This determination is based on the following factors:
1.Distinctiveness :Showing different behavior in different situations
2.Consensus :Responds in the same way as others to the same situation
3.Consistency : Responds in the same way over time

5. Attribution theory

6. Common shortcuts in judging others:
• Selective perception : people selectively interpret what they see on the basis
of one’s interests, background, experience, and attitudes.
• Halo effect :Drawing a general impression about an individual on the basis
of a single characteristic.

7. Common shortcuts in judging others(cont.)
• Contrast Effect: Evaluation of a person’s characteristics that is affected by
comparisons with other people recently encountered who rank higher or
lower on the same characteristics.
• 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.

8. The link between perception and decision
making:

9. Assumptions of rational decision making
model:
• A decision making model that describes how individuals should behave to
maximize some outcome.

10. Common biases and errors :
• Overconfidence bias
• Anchoring bias
• Confirmation bias
• Availability bias
• Representative bias
• Winner’s curse
• Escalation of commitment
• Hindsight bias
• Randomness error

11. INFLUENCE OF DECISION MAKING:
Individual differences and organizational
constraints
• Individual differences:
1.Personality
2.Gender
3.Mental ability
4.Cultural differences

12. INFLUENCE ON DECISION MAKING : Individual
differences and organizational constraints(cont.)
• Organizational constraints:
1.Performance evaluation
2.Reward system
3.Formal regulations
4.System-imposed time constraints
5.Historical precedence

13. ETHICS IN DECISION MAKING
• Three ethical decision criteria:
1.Utilarianism: Decisions are made to provide the greatest good for the greatest
number.
2. Rights: Respecting and protecting basic rights of individuals such as
whistleblowers
3. Justice: Imposing and enforcing rules fairly and impartially

14. Ways to improve decision:
• Analyze the situation and adjust your decision making style to fit the situation.
• Be aware of biases and try to limit their impact.
• Combine rational analysis with intuition to increase decision-making
effectiveness
• Don’t assume that your specific decision style is appropriate to every situation
• Enhance personal creativity by looking for novel problems.