Perception and Individual Decision
Making
Topic 3b
Dr. Fred Mugambi Mwirigi
JKUAT
1
Perception and Its Importance
Perception
A process by which individuals
organise and interpret their
sensory impressions in order
to give meaning to their
environment.
 People’s behaviour is based on
their perception of what reality
is, not on reality itself.
 The world as it is perceived is
the world that is behaviourally
important.
Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
2
Factors that Influence Perception
Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
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Attribution Theory
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Our perceptions of people differ from our
perceptions of inanimate objects.
Attribution theory suggests that when we observe an
individual’s behaviour, we attempt to determine
whether it was internally or externally caused.
That determination depends largely on three factors:
 Distinctiveness
 Consensus
 Consistency
Attribution Theory Contd.
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Distinctiveness refers to whether an individual displays
different behaviours in different situations. What we want
to know is whether the observed behaviour is unusual.
Consensus occurs if everyone who is faced with a similar
situation responds in the same way. For example, if
consensus is high, you would be expected to give an
external attribution to an employee’s lateness at work,
whereas if other employees who took the same route made
it to work on time, your conclusion as that causation would
be internal.
Consistency in a person’s actions. Does the person respond
the same way over time? The more consistent the
behaviour, the more the observer is inclined to attribute it
to internal causes.
Attribution Theory Contd.
Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
6
Key Errors and Biases in 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 behaviour of others
Self-Serving Bias
The tendency for individuals to
attribute their own successes to
internal factors while putting the
blame for failures on external factors
Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
7
Frequently Used Shortcuts in Judging Others
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Selective Perception
People selectively interpret what they see on the basis of
their interests, background, experience, and attitudes.
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Halo Effect
Drawing a general impression about an individual on the
basis of a single characteristic

Contrast Effects
Evaluation of a person’s characteristics based on
comparisons with other people recently encountered
who rank higher or lower on the same characteristics
Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
8
Frequently Used Shortcuts in Judging Others Contd.
Projection
Attributing one’s own characteristics to other people
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Stereotyping
Judging someone on the basis of one’s perception of the
group to which that person belongs
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Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
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Specific Applications in Organisations
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Employment Interview: Perceptual biases of raters affect
the accuracy of interviewers’ judgments of applicants
Performance Expectations: Self-fulfilling prophecy
(Pygmalion effect): The lower or higher performance of
employees reflects preconceived leader expectations about
employee capabilities.
Ethnic Profiling: A form of stereotyping in which a group
of individuals is singled out—typically on the basis of
race or ethnicity—for intensive inquiry, scrutinising, or
investigation
Performance Evaluations: Appraisals are often the
subjective (judgmental) perceptions of appraisers of
another employee’s job performance
Tuesday, March 22, 2016
compiled by Dr. Fred Mugambi
10
The Link Between Perception and
Individual decision Making
Problem
A perceived discrepancy between
the current state of affairs and a
desired state
Perception of
the Decision
Maker
Decisions
Choices made from among
alternatives developed from data
perceived as relevant
Outcomes
Assumptions of the Rational Decision
Making Model
Rational decision-making
model
Describes how individuals should
behave in order to maximise some
outcome
Model Assumptions:
 Problem clarity
 Known options
 Clear preferences
 Constant preferences
 No time or cost constraints
 Maximum payoff
Steps in Rational decision Making
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Define the problem
Identify the decision criteria
Allocate weights to the criteria
Develop the alternatives
Evaluate the alternatives
Select the best alternative.
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.
Common Biases and Errors
Overconfidence Bias
 Anchoring Bias
 Confirmation Bias
 Availability Bias
 Winner’s Curse
 Randomness Error
 Hindsight Bias
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Intuition
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Intuitive Decision-Making
An unconscious process created out of distilled
experience
Conditions Favouring Intuitive Decision Making:
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A high level of uncertainty
Little precedent to draw on
Less scientifically predictable Variables
Limited facts
Facts that don’t clearly point the way forward
Analytical data of little use
Existence of several plausible alternative solutions exist
Time limitation
Ethics in decision Making
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Ethical Decision Criteria
 Utilitarianism
Seeking the greatest good for the greatest number
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 Rights
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Respecting and protecting basic rights of
individuals such as whistleblowers
 Justice
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Imposing and enforcing rules fairly and
impartially
Ways to Improve Decision Making
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Analyse the situation and adjust your decisionmaking 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
solutions or seeing problems in new ways, and using
analogies.
Reducing Biases and Errors
Focus on goals
Clear goals make decision making easier
and help to eliminate options
inconsistent with your interests.
Look for information Overtly considering ways we could be
that disconfirms
wrong challenges our tendencies to
beliefs
think we’re smarter than we 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
generated will increase the chance of
finding an outstanding one.
End of Topic Three