Perception and Individual Decision Making Chapter 4 What Is Perception, and Why Is It Important? Importance in OB: People’s behaviour is based on their perception of what reality is, not on reality itself. Factors That Influence Perception Loud people are more likely to be noticed in a group than quiet ones. So, too, are extremely attractive or unattractive individuals. Factors in the situation includes location, Time, light, Heat or any other situational factor which can Influence our perception. Person Perception: Making Judgments About Others Can be determined on the basis of the following factors. Distinctiveness: shows different behaviors in different situations. What we want to know is whether this behaviour is unusual.----(e.g. lateness)—external attribution Consensus: response is the same as others to same situation. E.g. if all employees who took the same route were also late. If consensus is high----external attribution. Consistency: responds in the same way over time. (e.g coming 10 minutes late on daily basis----internal attribution Attribution Theory Errors and Biases in Attributions Errors and Biases in Attributions (cont’d) Differences across cultures One study found Korean managers less likely to use the self-serving bias—they tended to accept responsibility for group failure “because I was not a capable leader” instead of attributing failure to group members. On the other hand, Asian managers are more likely to blame institutions or whole organizations, Whereas Western observers believe individual managers should get blame or praise. Common Shortcuts in Judging Others Selective perception is the tendency not to notice and more quickly forget stimuli that cause emotional discomfort and contradict our prior beliefs. Seeing what we want to see, we can draw unwarranted conclusions from an ambiguous situation. Frequently Used Shortcuts in Judging Others Considering some one nice or positive on just one positive trait while ignoring many other negative traits he might have. E.g when people who drink or smoke are considered bad. “Never follow an act that has kids or animals in it.” Why? Audiences love children and animals so much that you’ll look bad in comparison. This example demonstrates how a contrast effect can distort perceptions. We don’t evaluate a person in isolation. Our reaction is influenced by other persons we have recently encountered. Frequently Used Shortcuts in Judging Others Overestimating the degree to which other people agree with us. People tend to assume that others think, feel, believe, and behave much like they do. Can be based on gender, age, race, religion, ethnicity E.g. Asians has better math ability, African Americans have greater athletic ability Specific Applications of shortcuts in Organizations Employment Interview – Perceptual biases affect the accuracy of interviewers’ judgments of applicants. Performance Expectations – 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 – Appraisals are subjective perceptions of performance. Employee Effort – Assessment of individual effort is a subjective judgment subject to perceptual distortion and bias. The Link Between Perceptions and Individual Decision Making Perceptions of the decision maker Outcomes Decision making occurs as a reaction to a problem. The perception of the decision maker decides Which data are relevant to the decision, and which are not and which source to collect data from. Finally, throughout the entire decision making process, perceptual distortions often surface that can bias analysis and conclusions. Assumptions of the Rational Decision-Making Model Rational decision making is a multi-step process for making choices between alternatives. It favors logic, objectivity, and analysis over subjectivity and insight. Decision making on the basis of facts, figures and logic. Relies on a number of assumptions 1. Problem clarity 2. Known options 3. Clear preferences 4. No time or cost constraints 5. Maximum payoff Steps in the Rational Decision-Making Model Rational Decision-Making Bounded Rationality - decision making that’s rational, but limited (bounded) by an individual’s ability to process information. In case of bounded rationality we Satisfice - accepting solutions that are “good enough.” Choosing an option that satisfy minimum necessary requirements. We construct simplified models that extract the essential features from problems without capturing all their complexity Intuitive decision- making Making decisions on the basis of experience, feelings, and accumulated judgment. Common Biases and Errors in Decision Making Using rules of thumb to simplify decision making Common Biases and Errors in Decision Making refers to staying with a decision even when there is clear evidence it’s wrong. They “throw good money after bad” to demonstrate their initial decision wasn’t wrong and to avoid admitting they made a mistake. Confirmation Bias - seeking Overconfidence Bias out information that reaffirms holding unrealistically past choices while positive views of oneself discounting contradictory information. and one’s performance. we give too much weight to When people say supporting information and they’re 100 percent too little to contradictory sure of an outcome, we are most prone to the they tend to be 70 to 85 confirmation bias when we percent correct. believe we have good information and strongly believe in our opinions. The availability bias is our tendency to base judgments on information readily available. More recent tend to be more available in our memory, leading us to overestimate the chances of unlikely events.. Managers doing performance appraisals give more weight to recent employee behaviours than to behaviours of 6 or 9 months earlier. Hindsight Bias Mistakenly believing that an event could have been predicted once the actual outcome is known (afterthe-fact).
