This document summarizes a chapter on perception and individual decision making. It discusses key topics like what perception is, factors that influence perception, attribution theory, biases in attribution, shortcuts used to judge others, and rational decision making models. The rational model involves 6 steps: defining the problem, criteria, alternatives, evaluation, and selection. However, real decisions often differ as people have limitations and use heuristics. Perception affects outcomes as behavior is based on perceived rather than objective reality.

1. Perception
& Individual Decision Making
Chapter 5
1–1
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
Organizational Behavior
Stephen P. Robbins
T E N T H E D I T I O N

2. Chapter Learning ObjectivesChapter Learning Objectives
After studying this chapter you should be able to:
1.What is perception?
2.What causes people to have different perceptions of the same situation?
3.Can people be mistaken in their perceptions?
4.Does perception really affect outcomes?
5.Explain how two people can see the same thing and interpret it differently
6.List the three determinants of attribution
7.Describe how shortcuts can assist in or distort our judgment of others
8.Explain how perception affects the decision making process
9.Outline the six steps in the rational decision making model
10.Describe the actions of the bounded rational decision maker
11.List and explain the common decision biases or errors
12.Identify the conditions in which individuals are most likely to use intuition in
decision making
13.Contrast the three ethical decision criteria
2-2
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

3. Perception
A process by which individuals organize and interpret their
sensory impressions in order to give meaning to their environment.
Why perception is important?
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.
Perception Behavior
Decision making is based on perception
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
What Is Perception, and Why Is It Important?

4. KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
Factors that influence perceptionFactors that influence perception

5. Person Perception: Making Judgments About OthersPerson Perception: Making Judgments About Others
Attribution Theory
When individuals observe behavior, they attempt to determine whether it is
internally or externally caused.
1.Internally - caused behaviors are those that are believed to be under the personal
control of the individual.
2.Externally - caused behavior seen as resulting from outside causes i.e., the person is
seen as having been forced into the behavior by the situation.
3.Example – If one of your employee is late for work, how will you perceive his
lateness, as a manager?
Determination, however, depends on three factors:
1.Distinctiveness: shows different behaviors in different situations.
2.Consensus: response is the same as others to same situation.
3.Consistency: responds in the same way over time.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

6. Person Perception: Making Judgments About OthersPerson Perception: Making Judgments About Others
1. Distinctiveness : what we want to know is whether this behavior
is unusual. If it is, the observer is likely to give the behavior an
external attribution. If this action is not unusual, it will be judged
as internal.
2. Consensus : if everyone who is faced with a similar situation
responds in the same way, we can say the behavior shows
consensus. From an attribution point of view, if consensus is
high, you would be expected to give an external attribution to the
employee’s tardiness.
3. Consistency : the more consistent the behavior, the more the
observer is inclined to attribute it to internal causes.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

7. Attribution TheoryAttribution Theory
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

8. Errors and Biases in AttributionsErrors and Biases in Attributions
Fundamental Attribution Error
1.One of the more interesting findings from the attribution theory is
that there are errors or biases that distort attributions.
2.The tendency to underestimate the influence of external factors
and overestimate the influence of internal factors when making
judgments about the behavior of others.
3.In general, we tend to blame the person first, not the situation.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

9. Errors and Biases in Attributions (cont’d)Errors and Biases in Attributions (cont’d)
Self-Serving Bias
The tendency for individuals to attribute their own successes to
internal factors while putting the blame for failures on external
factors.
Example: Thought: When student gets an “A” on an exam, they often say
they studied hard. But when they don’t do well, how does the self serving
bias come into play?
Hint: Whose fault is it usually when an exam is “tough”?
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

10. Frequently Used Shortcuts in Judging OthersFrequently Used Shortcuts in Judging Others
Selective Perception
People selectively interpret what they see on the basis of their
interests, background, experience, and attitudes.
Selective perception allows us to “speed-read” others, but not
without the risk of drawing an inaccurate picture.
Dearborn & Simon’s perceptual study – 23 business executives,06
from sales, 05 from production, 04 from accounting & 08 from
miscellaneous functions.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

11. Frequently Used Shortcuts in Judging OthersFrequently Used Shortcuts in Judging Others
Halo Effect
Drawing a general impression about an individual on the basis of a
single characteristic-appearance, intelligence etc.
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
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

12. Frequently Used Shortcuts in Judging OthersFrequently Used Shortcuts in Judging Others
Projection
Attributing one’s own characteristics to other people-
can distort perceptions made about others. It is easy to
judge others if we assume that they are similar to us.
Stereotyping
Judging someone on the basis of one’s perception of the group to
which that person belongs.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

13. Specific Applications in OrganizationsSpecific Applications in Organizations
1. Employment Interview:
1. Perceptual biases of raters affect the accuracy of
interviewers’ judgments of applicants.
2. Performance Expectations:
1. Self-fulfilling prophecy (Pygmalion effect): The lower or
higher performance of employees reflects preconceived
leader expectations about employee capabilities.
3. Performance Evaluation:
1. Managers evaluate employees based on their
perception (objective easy – subjective difficult)
4. Employee Efforts:
1. As teachers expect their students to be hardworking and so do
managers expect their subordinates
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

14. The Link Between Perceptions and Individual Decision
Making
The Link Between Perceptions and Individual Decision
Making
Perception of
the decision
maker
Perception of
the decision
maker
Outcomes
Problem
A perceived discrepancy
between the current state of
affairs and a desired state.
Decisions
Choices made from among
alternatives developed from
data perceived as relevant.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

15. Steps in the Rational Decision-Making ModelSteps in the 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.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

16. Assumptions of the Rational Decision-Making ModelAssumptions of the Rational Decision-Making Model
Model Assumptions
1.Problem clarity
2.Known options
3.Clear preferences
4.Constant preferences
5.No time or cost constraints
6.Maximum payoff
Rational Decision-
Making Model
Describes how individuals should
behave in order to maximize
some outcome.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

17. Rational Decision Making AssumptionsRational Decision Making Assumptions
1. Problem Clarity – there is no ambiguity. Complete information about the
dimensions of the problem are available to the decision maker.
2. Known Options – decision maker is able to identify all the viable alternative,
also is aware of all the possible consequences of each alternative.
3. Clear Preferences – rationality assumes that the criteria & alternatives can
be ranked & weighted to reflect their importance.
4. Constant Preferences – specific decision criteria are constant & the weights
assigned to them are stable over time.
5. No Time or Cost Constraint –
6. Maximum Payoff – rational decision maker will choose the alternative with
highest perceived value.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

18. The Three Components of CreativityThe Three Components of Creativity
Creativity
Rational decision maker needs
creativity - the ability to produce
novel and useful ideas.
Three-Component
Model of Creativity
Proposition that individual creativity
requires expertise, creative-thinking
skills, and intrinsic task motivation.
Source: T.M. Amabile, “Motivating Creativity in Organizations,” California Management Review, Fall 1997, p. 43.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

19. How Are Decisions Actually Made in Organizations?How Are Decisions Actually Made in Organizations?
1. When faced with a complex problem, most people respond by
reducing the problem to a level at which it can be readily
understood.
2. This is because the limited information-processing capability of
human beings make it impossible to assimilate & understand
all the information necessary to optimize.
3. So, people SATISFICE, i.e., they seek solutions that are
satisfactory & sufficient.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

20. How Are Decisions Actually Made in Organizations?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.
1. Because the capacity of human mind for formulating & solving
complex
2. problems is far too small to meet the requirements for full
rationality,
3. individuals operate within the confines of bounded rationality.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

21. IntuitionIntuition
1. Intuitive Decision Making
– An unconscious process created out of distilled experience.
1. Conditions Favoring Intuitive Decision Making
1. A high level of uncertainty exists
2. There is little precedent to draw on
3. Variables are less scientifically predictable
4. “Facts” are limited
5. Facts don’t clearly point the way
6. Analytical data are of little use
7. Several plausible alternative solutions exist
8. Time is limited and pressing for the right decision
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

22. How Are Decisions Actually Made in Organizations? (cont’d)How Are Decisions Actually Made in Organizations? (cont’d)
1. 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)
1. Alternative Development
– Satisficing: seeking the first alternative that solves problem.
– Engaging in incremental rather than unique problem solving
through successive limited comparison of alternatives to the
current alternative in effect.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

23. Making choicesMaking choices
Making choices: Biases in decision making are as follows:
1.Heuristics: judgments shortcuts making.
2.Availability Heuristic: the tendency for people to base their judgments on
information that is readily available to them.
1. Example: we overstate the risk of airplane and understate the risk of driving by
car because the media focuses too much on airplane crash which is in fact
very rare.
3.Representative Heuristic: assessing the likelihood of an occurrence by
drawing analogies and seeing identical situations in which they do not exist.
1. Example: boys see famous football players and they spontaneously think that
they can also become like them although they can become something else
2. Example: a recent graduate of KDR University has been recruited by a
company whose performance isn't satisfactory and now the company will not
recruit graduates from KDR university as the company thinks all of the
graduates from KDR university will have the same low level of knowledge,
skills and motivation to do a job.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

24. Common Biases and ErrorsCommon Biases and Errors
1. Escalation of Commitment
– An increased commitment to a previous decision in spite of
negative information.
1. Randomness Error
– Creating meaning out of random events
1. Hindsight Bias
– Looking back, once the outcome has occurred, and believing
that you accurately predicted the outcome of an event
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

25. Decision-Style Model – Individual DifferencesDecision-Style Model – Individual Differences
Source: A.J. Rowe and J.D. Boulgarides, Managerial Decision
Making, (Upper Saddle River, NJ: Prentice Hall, 1992), p. 29.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

26. Decision-Style Model…..continuedDecision-Style Model…..continued
The basic foundation of the model is the recognition that people differ
along two dimensions.
First is their way of thinking. Some people are logical & rational.
They process information serially. In contrast some people are intuitive
& creative. They perceive things as a whole.
Second dimension addresses a person’s tolerance for ambiguity.
Some people have a high need to structure information in ways that
minimize ambiguity.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

27. Decision-Style Model…..continuedDecision-Style Model…..continued
While others are able to process many thoughts at the same time.
1.Directive Style – have a low tolerance for ambiguity & seek
rationality. They are efficient & logical. They make decisions fast &
they focus on the short run.
2.Analytical Type – has a much greater tolerance for ambiguity. This
leads to the desire for more information & consideration for more
alternatives than is true for directives. They are careful decision
makers with the ability to adapt to or cope with novel & unexpected
situations.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

28. Decision-Style Model…..continuedDecision-Style Model…..continued
1. Conceptual Style – tend to use data from multiple sources &
consider many alternatives. Their focus is long range, and they
are very good at finding creative solutions to problems.
2. Behavioral Style – are decision makers who have a strong
concern for the people in the org. & their development. They’re
concerned with the well being of their subordinates & are
receptive to suggestions from others. They tend to focus on the
short term & to downplay the use of data in their decision
making. This type of manager tries to avoid conflict & seeks
acceptance.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

29. Organizational Constraints on Decision MakersOrganizational Constraints on Decision Makers
1. Performance Evaluation
– Evaluation criteria influence the choice of actions.
1. Reward Systems
– Decision makers make action choices that are favored by the
organization.
1. Formal Regulations
– Organizational rules and policies limit the alternative choices of
decision makers.
1. System-imposed Time Constraints
– Organizations require decisions by specific deadlines.
1. Historical Precedents
– Past decisions influence current decisions.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

30. Cultural Differences in Decision MakingCultural Differences in Decision Making
1. Problems selected
2. Time orientation
3. Importance of logic and rationality
4. Belief in the ability of people to solve problems
5. Preference for collective decision making
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

31. Ethics in Decision MakingEthics in Decision Making
Ethical Decision Criteria
1.Utilitarianism
1. Seeking the greatest good for the greatest number.
2. Pro: Promotes efficiency and productivity
3. Con: Can ignore individual rights, especially minorities
2.Rights
1. Respecting and protecting basic rights of individuals such as whistleblowers.
2. Pro: Protects individuals from harm; preserves rights
3. Con: Creates an overly legalistic work environment
3.Justice
1. Imposing and enforcing rules fairly and impartially.
– Pro: Protects the interests of weaker members
– Con: Encourages a sense of entitlement
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

32. Ethics in Decision MakingEthics in Decision Making
Ethics and National Culture
1. There are no global ethical standards.
2. The ethical principles of global organizations that
reflect and respect local cultural norms are necessary
for high standards and consistent practices.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

33. Ways to Improve Decision MakingWays to Improve Decision Making
1. Analyze the situation and adjust your decision making style to fit
the situation.
2. Be aware of biases and try to limit their impact.
3. Combine rational analysis with intuition to increase decision-
making effectiveness.
4. Don’t assume that your specific decision style is appropriate to
every situation.
5. Enhance personal creativity by looking for novel solutions or
seeing problems in new ways, and using analogies.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

34. Toward Reducing Bias and ErrorsToward Reducing Bias and Errors
1. Focus on goals.
– Clear goals make decision making easier and help to eliminate
options inconsistent with your interests.
1. Look for information that disconfirms beliefs.
– Overtly considering ways we could be wrong challenges our
tendencies to think we’re smarter than we actually are.
1. Don’t try to create meaning out of random events.
– Don’t attempt to create meaning out of coincidence.
1. Increase your options.
– The number and diversity of alternatives generated increases
the chance of finding an outstanding one.
Source: S.P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control
of Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), pp. 164–68.
KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez

35. KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
Summary and ImplicationsSummary and Implications
3. Can people be mistaken in their perceptions?
Shortcuts, such as:
1. attribution theory,
2. selective perception,
3. halo effect,
4. contrast effects,
5. projection, and stereotyping
are helpful and even necessary, but can and do get us in trouble.
3. Does perception really affect outcomes?
– Perceptions often affect productivity more than the
situation does.

36. KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
For ReviewFor Review
1. Define perception.
2. What is attribution theory? What are its implications for explaining behaviour in
organizations?
3. What is stereotyping? Give an example of how stereotyping can create perceptual
distortion.
4. Give some positive results of using shortcuts when judging others.
5. Describe the factors in the Big Five model. Evaluate which factor shows the greatest
value in predicting behavior.
6. What behavioural predictions might you make if you knew that an employee had (a) an
external locus of control? (b) a low Mach score? (c) low self-esteem? (d) a Type A
personality?
7. To what extent do people’s personalities affect how they are perceived?
8. What is emotional labour and why is it important to understanding OB?
9. What is emotional intelligence and why is it important?

37. KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
For Critical ThinkingFor Critical Thinking
1. How might the differences in experience of students and instructors affect each of
their perceptions of classroom behavior (e.g., students’ written work and class
comments)?
2. An employee does an unsatisfactory job on an assigned project. Explain the attribution
process that this person’s manager will use to form judgments about this employee’s
job performance.
3. One day your boss comes in and he’s nervous, edgy, and argumentative. The next day
he is calm and relaxed. Does this behaviour suggest that personality traits aren’t
consistent from day to day?
4. What, if anything, can managers do to manage emotions? Are there ethical
implications in any of these actions? If so, what?
5. Give some examples of situations where expressingng emotions might enhance job
performance.

38. KDR University, PA Faculty, Organizational Behavior
Chapter-1, Lecture by: Barai Mobarez
Breakout Group ExercisesBreakout Group Exercises
Form small groups to discuss the following topics:
1. Think back to your perception of this course and your instructor on the first
day of class. What factors might have affected your perceptions of what
the rest of the term would be like?
2. Describe a situation in which your perception turned out to be wrong. What
perceptual errors did you make that might have caused this to happen?
3. Compare your scores on the Learning About Yourself Exercises at the end
of the chapter. What conclusions could you draw about your group based
on these scores?