Perception and Decision making

What do you see ?

• The eyes see , but the mind evaluates

• People’s behavior is based on their perception

of reality, not on reality itself

• Perception is a personal construct

 What is Perception
• The process by which people select, organize,
interpret, retrieve, and respond to information.
• Perceptual information is gathered from:
• Sight.
• Hearing.
• Touch.

Perception • Taste.
• Smell.
 What is the perceptual process?

 Factors influencing the perceptual process.

– Characteristics of the perceiver.

– Characteristics of the setting.

– Characteristics of the perceived.

 Characteristics of the perceiver.
– The perceptual process is influenced by the
perceiver’s:
• Past experiences.
• Needs or motives.
• Personality.
• Values and attitudes.
 Characteristics of the setting.
– The perceptual process is influenced by the
setting’s:
• Physical context.

• Social context.
• Organizational context.
 Characteristics of the setting.
– The perceptual process is influenced by the
setting’s:
• Physical context.

• Social context.
• Organizational context.
 Characteristics of the perceived.
– The perceptual process is influenced by
characteristics of the perceived person, object, or
event, such as:
• Contrast.
• Intensity.
• Figure-ground separation.
• Size.
• Motion.
• Repetition or novelty.
 Stages of the perceptual process.
– Information attention and selection.
– Organization of information.

– Information interpretation.
– Information retrieval.
 Information attention and selection.
– Selective screening.
• Lets in only a tiny proportion all the information that
bombards a person.
– Two types of selective screening.
• Controlled processing.
• Screening without perceiver’s conscious awareness.
 Organization of information.
– Schemas.
• Cognitive frameworks that represent organized knowledge about a
given concept or stimulus developed through experience.
– Types of schemas.
• Self schemas.
• Person schemas.
• Script schemas.
• Person-in-situation schemas.
 Information interpretation.
– Uncovering the reasons behind the ways stimuli
are grouped.
– People may interpret the same information
differently or make different attributions about
information.
 Information retrieval.
– Attention and selection, organization, and
interpretation are part of memory.
– Information stored in memory must be retrieved
in order to be used.
 Common perceptual distortions include:
– Stereotypes or prototypes.
– Halo effects.
– Selective perception.
– Projection.
– Contrast effects.
– Self-fulfilling prophecy.
 Stereotypes or prototypes.
– Combines information based on the category or
class to which a person, situation, or object
belongs.
– Strong impact at the organization stage.
– Individual differences are obscured.
 Halo effects.
– Occur when one attribute of a person or situation
is used to develop an overall impression of the
individual or situation.
– Likely to occur in the organization stage.
– Individual differences are obscured.
– Important in the performance appraisal process.
 Selective perception.
– The tendency to single out those aspects of a
situation, person, or object that are consistent
with one’s needs, values, or attitudes.
– Strongest impact is at the attention stage.
– Perception checking with other persons can help
counter the adverse impact of selective
perception.
 Projection.
– The assignment of one’s personal attributes to
other individuals.
– Especially likely to occur in interpretation stage.
– Projection can be controlled through a high
degree of self-awareness and empathy.
 Contrast effects.

– Occur when an individual is compared to other

people on the same characteristics on which the
others rank higher or lower
 Self-fulfilling prophecy.
– The tendency to create or find in another situation
or individual that which one expected to find.
– Also called the “Pygmalion effect.”
– Can have either positive or negative outcomes.
– Managers should adopt positive and optimistic
approaches to people at work
 How can the perceptual
process be managed?
 Distortion management.
– Managers should:

• Analyze own assumptions & biases

• Don’t jump to conclusions

• Collect more information / data / facts

• Understand one’s own feelings of threat / anxiety

 What is attribution theory?
 Attribution theory aids in perceptual
interpretation by focusing on how people
attempt to:
– Understand the causes of a certain event.
– Assess responsibility for the outcomes of the
event.
– Evaluate the personal qualities of the people
involved in the event.
 Internal versus external attributions of causes
of behavior.
– Internal causes are under the individual’s control.

– External causes are within the person’s

environment.
 Fundamental attribution error:
Applies to the evaluation of someone’s else
behavior.
– Attributing success to the influence of situational
factors.
– Attributing failure to the influence of personal
factors.
 Self-serving bias.
– Applies to the evaluation of our own behavior.
– Attributing success to the influence of personal
factors.
– Attributing failure to the influence of situational
factors.
 Decision Making
• The process through which managers identify and
resolve problems and capitalize on opportunities.
• The process of making choices from among
several alternatives.
Steps in the Decision-Making Process
Identifying opportunities and diagnosing problems

Identifying objectives

Generating alternatives

Evaluating alternatives

Reaching decisions

Choosing implementation strategies

Monitoring and evaluating

 Models of Decision Making
• Rational-Economic Model
– A prescriptive framework of how a decision should
be made that assumes managers have completely
accurate information.
• Behavioral Decision Model
– Unlike the rational-economic model, the
behavioral decision-making model acknowledges
human limitations that make rational decisions
difficult to achieve.
 Rational-Economic Model
Slide 1 of 3
• Concentrates on how decisions should be
made, not on how they actually are made
• The model is based on the following
assumptions:
– Managers have “perfect information.”
– Managers attempt to accomplish objectives that
are known and agreed upon and have an
extensive list of alternatives from which to
choose.
 Rational-Economic Model
Slide 2 of 3
• Assumptions of Rational-Economic Model
(continued)
– Managers are rational, systematic, and logical in
assessing alternatives and their associated
probabilities.
– Managers work in the best interests of their
organizations.
– Ethical decisions do not arise in the decision-
making process.
 Rational-Economic Model
Slide 3 of 3
• Conclusion
– As these assumptions suggest, the rational-
economic model does not address the influences
that affect decision environments or describe how
managers actually make decisions.
– As a consequence, in practice the model may not
always be a realistic depiction of managerial
behavior.
 Behavioral Decision Model
Slide 1 of 4
• Unlike the rational-economic model, the
behavioral decision model acknowledges
human limitations.
• The behavioral decision model suggests that a
person’s cognitive ability to process
information is limited.
 Behavioral Decision Model
Slide 2 of 4
Concepts that are important to understand
how we make decisions:

Bounded
Intuition
Rationality

Escalation of
Satisficing Commitment
 Behavioral Decision Model
Slide 3 of 4
• Bounded Rationality
– Recognizes that people are limited by
organizational constraints such as time,
information, resources, and their own mental
capabilities.
• Intuition
– An unconscious analysis based on past
experience.
 Behavioral Decision Model
Slide 4 of 4
• Satisficing
– The search and acceptance of something that is
satisfactory rather than perfect or optimal.
• Escalation of Commitment
– The tendency to increase commitment to a
previously selected course of action
• Anchoring bias- A tendency to fixate on initial
information, from which one then fails to
adequately adjust for subsequent information
• Confirmation bias: The tendency to seek out
information that reaffirms past choices and to
discount the information that contradicts past
judgments
• Availability bias: The tendency for people to
base their judgments on information that is
readily available to them
 Group Considerations in Decision
Making
Group decision making is becoming more
common as organizations focus on
improving customer service and push
decision making to lower levels.
 Impact of Group Size on
Participation in Decision Making
Slide 1 of 2

In deciding whether a participative model of

decision making is appropriate, a manager
must consider the size of the group.
 Impact of Group Size on
Participation in Decision Making
• In general, as group size increases, the
following changes in the decision-making
process are likely to be observed:
– The leader becomes more psychologically
distant from the other members.
– The group’s tolerance of direction from the
leader is greater, and the team’s decision
making becomes more centralized.
– The atmosphere is less friendly.
– Rules and procedures become more
formalized.
Advantages of Group Decision Making
• Experience and expertise of several individuals
available.
• More information, data, and facts
accumulated.
• Problems viewed from several perspectives.
• Higher member satisfaction.
• Greater acceptance and commitment to
decisions.
 Disadvantages of Group Decision
Making
• Greater time requirement

• Compromise
• Concern for individual rather than group goals
• Social pressure to conform
• Groupthink
 Groupthink
Slide 1 of 3

An agreement-at-any-cost
mentality that results in
ineffective group decision making.
 Groupthink
Slide 2 of 3
• Characteristics of Groupthink
– Illusions of invulnerability
– Collective rationalization
– Belief in the morality of group decisions
– Self-censorship
– Illusion of unanimity in decision making
– Pressure on members who express arguments
 Groupthink
Slide 3 of 3
• Types of Defective Decisions
– Incomplete survey of alternatives
– Incomplete survey of goals
– Failure to examine risks of preferred decisions
– Poor information search
– Failure to reappraise alternatives
– Failure to develop contingency plans