Chapter 6 Notes: Perception and Individual Decision Making PDF

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Summary

Objectives:
-Explain the factors that influence perception
-Describe attribution theory
-Explain the link between perception and decision making
-Contrast the rational model of decision making with bounded rationality and intuition
-Explain how individual differences an...

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Chapter 6: Perception and Individual Decision Making Objectives: -Explain the factors that influence perception -Describe attribution theory -Explain the link between perception and decision making -Contrast the rational model of decision making with bounded rationality and intuition -Explain how individual differences and organizational constraints affect decision making -Contrast the three ethical decision criteria -Describe the three-stage model of creativity

What is Perception? ● A process by which we organize and interpret sensory impressions in order to give meaning to our environment ● People’s behavior is based on their perception of what reality is, not reality itself ● Our perception becomes the reality from which we act Factors That Influence Perception ● Factors can reside in the perceiver, target, or the situation ● Perceiver: your interpretation of what you see is influenced by your personal characteristics---attitudes, personality, motives, interests, past experiences, and expectations ● Sometimes we hear what we want to hear and see what we want to see because it conforms to our thinking ● Target: the relationship of a target to its background influences perception, as does our tendency to group close things and similar things together ○ Sometimes these assumptions are harmful ● Context: the time at which we see an object or event can influence our attention, as can location, light, heat, or situational factors Person Perception: Making Judgements About Others ● Attribution Theory: tries to explain the ways we judge people differently, depending on the meaning we attribute to a behavior ○ When we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused. ○ Internal behaviors: are those an observer believes to be under the personal behavioral control of another individual ○ External behaviors: what we imagine the situation forced the individual to do ○ Internal or external depends on 3 factors: ■ Distinctiveness: refers to whether an individual displays different behaviors in different situations ■ Consensus: when those faced with a similar situation respond in the same way ■ Consistency: does the person respond the same way over time?

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Errors or biases distort 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 ■ Success is commonly attributed to internal factors such as ability or effort whereas failure is usually caused by external factors such as bad luck ■ Self-serving bias: attributing ambiguous information as relatively flattering, accept positive feedback, and reject negative feedback There are differences across cultures in the attributions people make

Common Shortcuts in Judging Others ● Shortcuts allow us to make accurate perceptions rapidly and provide valid data for making predictions ● They can result in significant distortions ● Selective Perception: the tendency to selectively interpret what one sees on the basis of one’s interests, background, experience, and attitudes ○ We can’t observe everything going on around us ○ From this, we draw unwarranted conclusions ● Halo Effect: drawing an impression about an individual on the basis of a single characteristic such as intelligence, sociability, or appearance ● Contrast Effects: 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 ○ This occurs often in job interviews ● Stereotyping: judging someone on the basis of our perception of the group to which he/she belongs ○ Widespread generalizations, though they may not be truthful Specific Applications of Shortcuts in Organizations ● Employment Interview: interviewers make perceptual judgments that are often inaccurate and draw early impressions that quickly become entrenched ○ Good applicants are often characterized more by the absence of unfavorable characteristics than by the presence of favorable ones ● Performance Expectations: people attempt to validate their perceptions of reality even when these perceptions are faulty ○ Self-fulfilling Prophecy- a situation in which a person inaccurately perceives a second person, and the resulting expectations cause the second person to behave in ways consistent with the original perception ○ Expectations become reality ● Performance Evaluations: an employee’s future is closely tied to his/her appraisal The Link Between Perception and Individual Decision Making ● Decisions: choices from among two or more alternatives ○ This is largely influenced by their perceptions ● Problem: a discrepancy between the current state of affairs and some desired state

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A decision is made in reaction to the problem Decisions require us to interpret and evaluate information and our perceptions answer our questions regarding the decisions

Decision Making in Organizations The Rational Model, Bounded Rationality, and Intuition ● Rational: making consistent, value-maximizing choices within specified constraints ● Rational Decision Making: follows a six-step 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 ○ Assumes the decision maker has complete information, is able to identify all relevant options in an unbiased manner, and chooses the option with the highest utility ○ In reality, most decisions don’t follow the rational model ● Bounded Rationality: the human mind cannot formulate and solve complex problems with full rationality so we operate within certain confines; we construct simplified models that extract the essential features from problems without capturing all their complexity ○ Satisfice: seeking solutions that are satisfactory and sufficient ○ We tend to reduce complex problems to a level we can readily understand ● Intuition: the least rational way of decision making ○ It is an unconscious process created from distilled experience ○ It occurs outside conscious though, relies on holistic association, or links between disparate pieces of information ○ It isn’t necessarily wrong, and it can complement rational analysis Common Biases and Errors in Decision Making ● People tend to rely too heavily on experience, impulses, gut feelings, and convenient rules of thumb ● The most common biases in decision making include: ○ Overconfidence Bias: we tend to be overconfident about our abilities and the abilities of others ○ Those whose intellectual and interpersonal abilities are weak are most likely to overestimate their performance and ability ● Anchoring Bias: the tendency to fixate on initial information and fail to adequately adjust for subsequent information ○ The mind gives a disproportionate amount of emphasis to the first information it receives ○ Anchors are widely used by professions like advertising, management, politics, real estate, and law

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Confirmation Bias: represents selective perception ○ We seek out information that reaffirms our past choices, and we discount information that contradicts them ○ We also accept face value information that confirms our preconceived views while we are skeptical of information that challenges them Availability Bias: our tendency to base judgements on readily available information ○ A combination of readily available information and our previous direct experience with similar information has a very strong impact on our decision making ○ Events that evoke emotion tend to be more available in our memory Escalation of Commitment: refers to our staying with a decision even if there is clear evidence that it's wrong ○ Occurs when individuals view themselves as responsible for the outcome Randomness Error: our tendency to believe we can predict the outcome of random events ○ Decision making suffers especially when we turn imaginary patterns into superstitions Risk Aversion: the tendency to prefer a sure thing over a risky outcome ○ Implications: ■ To offset the inherent risk employees accept in a commision-based wage companies may pay commissioned employees more than they do those on straight salaries ■ Risk-averse employees will stick with the established way of doing their jobs rather than take a chance on innovative methods ■ Ambitious people with power that can be taken away appear to be especially risk averse ○ Reversed: people take chances when trying to prevent a negative outcome Hindsight Bias: the tendency to believe falsely, after the outcome is known, that we would have accurately predicted it

Influences on Decision Making: Individual Differences and Organizational Constraints Individual Differences: ● Personality: conscientiousness and self-esteem ● Gender: do men or women make decisions better? ○ Depends on the situation ● Mental Ability: intelligent people are just as likely to fall prey to anchoring, overconfidence, and escalation of commitment ○ However.. Once warned about decision making errors, more intelligent people learn more quickly to avoid them ● Cultural Differences: cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logical and rationality, and whether organizational decisions should be made autocratically by an individual manager or collectively in groups ○ Cultures differ in time orientation, their belief in the ability of people to solve

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problems, and their preference for collective decision making Nudging: an organization’s attempt to influence our perceptions of a product and our decision to acquire that product ○ Commercials

Organizational Constraints ● Performance evaluation systems: ○ Managers are influenced by the criteria on which they are evaluated ● Reward systems: ○ Influencing decision makers by suggesting which choices have better personal payoffs ● Formal regulations: ○ Rules and policies to program decisions and get individuals to act in the intended manner ○ Limit decision choices ● System-Imposed time constraints: ○ Deadlines ○ Conditions make it difficult for managers to gather all information before making a final choice ● Historical Precedents: ○ Choices made today are a result of choices made over the years What About Ethics in Decision Making? Three Ethical Decision Criteria 1. Utilitarianism: proposes making decisions solely on the basis of their outcomes, ideally to provide the greatest good for the greatest number a. This vies dominates business decision making and is consistent with goals such as efficiency, productivity, and high profits b. Utilitarian values can vary by culture 2. Making decisions consistent with fundamental liberties and privileges a. Emphasis on rights to protect the basic rights of individuals such as the right to privacy, free speech, and due process. b. Whistle-blowers: those who reveal an organization’s unethical practices to the press or government agencies c. Whistle-blowers are protected by the criteria mentioned before 3. Impose and enforce rules fairly and impartially to ensure justice or an equitable distribution and benefits and costs a. This can be used to justify paying people the same wage for a given job regardless of performance differences and using seniority for layoff decisions ● ●

Decision makers in for-profit organizations feel comfortable with utilitarianism Corporate social responsibility (CSR)- tries to influence a positive change ○ Consumers increasingly choose to purchase goods and services from

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organizations with effective CSR initiatives Behavioral ethics: an area of study that analyzes how people behave when confronted with ethical dilemmas ■ We do not always follow ethical standards promoted by our organizations, and we sometimes violate our own standards

We are all liars We lie to ourselves We lie to others We lie consciously and unconsciously Lying is one of the top unethical activities and it undermines efforts toward sound decision making Lying can sometimes be detected in eye position, facial expressions, verbal cues, written cues,and body language In organizational behavior, lying yields unreliable results

Creativity, Creative Decision Making, and Innovation in Organizations ● Creativity: the ability to produce novel and useful ideas ○ Allows the decision maker to fully appraise and understand problems ● Three-stage model of creativity: core of the model is creative behavior ○ Includes causes (predictors of creative behavior) and effects (outcomes of creative behavior Creative Behavior 1. Problem Formulation: any act of creativity begins with a problem that the behavior is designed to solve a. Problem formulation: the stage of creative behavior in which we identify a problem or opportunity that requires a solution as yet unknown 2. Information Gathering: the stage of creative behavior when knowledge is sought and possible solutions to a problem incubate in an individual’s mind a. Leads us to identifying innovation opportunities 3. Idea Generation: the process of creative behavior in which we develop possible solutions to a problem form relevant information and knowledge a. Tricks like doodling or taking a walk can jumpstart this process 4. Idea Evaluation: the process of creative behavior in which we evaluate potential solutions to identify the best one a. Sometimes you want those who evaluate the ideas to be different from those who generate them to eliminate bias Causes of Creative Behavior ● Creative Potential: 1. Intelligence and Creativity: a. Smart people are creative because they are better at solving complex

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problems or because they have a greater “working memory” 2. Personality and Creativity: a. Experience correlates with creativity b. Proactive personality, self-confidence, risk taking, tolerance for ambiguity, and perseverance c. As well as, hope self-efficacy, and positive affect 3. Expertise and Creativity: a. Expertise is the foundation for all creative work and thus is the single most important predictor of creative potential 4. Ethics and Creativity: a. It is not correlated with ethicality b. Dishonest and creativity are linked Creative Environment ○ We have to be in an environment where creative potential can be realized ○ Motivation is important for creativity ○ It is valuable to work in an environment that rewards and recognizes creative work ○ Creativity can be inspired by an abundance of resources as well ○ A culture that scores high in individuality may be more creative ○ Good leadership matters ○ Diverse teams are more creative Creative Outcomes (Innovation) ○ Creative behavior does not always produce an innovative outcome ○ Some ideas are never shared ○ Some ideas are rejected ○ Teams might squelch creative behaviors ○ Creative outcomes: ideas or solutions judged to be novel and useful by relevant stakeholders ○ Novelty itself does not generate a creative outcome if it isn’t useful ○ Creative ideas do not implement themselves...