Covers Ch 1,2,3,4
20% MCQ
40% SQ
40% LQ
Adeyl Khan, Faculty, BBA, NSU
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Muslims are terrorist!
Hindus are transferring assets to India
Perception and
Aborigines make trouble
Individual Decision Making
……..
Adeyl Khan, Faculty, BBA, NSU
What Is Perception, and Why Is It
Important?
People’s behavior is
based on their
perception of what
reality is, not on
(objective) reality
itself.
Reality
Adeyl Khan, Faculty, BBA, NSU
Behavior
A great org. to work for
Factors Influencing
Perception
Personal
Characteristics
Context
Shape
Distort
Adeyl Khan, Faculty, BBA, NSU
Relationship to
background
-Grouping
Person Perception: Making Judgments
About Others
Judging:
 Why people act the way
they do?
 What is causing it?
Distinctiveness: shows different behaviors in different situations.
Consensus: response is the same as others to same situation.
Consistency: responds in the same way over time.
Adeyl Khan, Faculty, BBA, NSU
Attribution Theory
Individual’s behavior
Everyone’s behavior
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Individual’s action
Errors and Biases in Attributions
Poor Sales Performance
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Errors and Biases in Attributions …
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Frequently Used Shortcuts in Judging
Comprehensive
Others
Case Study
-Important
problems
Boss reprimand certain people and not others
Adeyl Khan, Faculty, BBA, NSU
Frequently Used Shortcuts in Judging
Others
HP CEO- Fiorina
 Halo Effect
 Draw a general impression about others
on the basis of a single
attribute/characteristic


• Articulate, decisive,
charismatic … Vs.
unproven,
egotistical, inflexible
intelligence, appearance
an instructor, a student who comes in late in the
first class
 Contrast Effect
 Contrast effects (can) distort perceptions
 Do we evaluate a person in isolation? Or
influenced by other persons we have
recently encountered.
 Interviewer sees a pool of job applicants.
Adeyl Khan, Faculty, BBA, NSU
Children,
Animal and
You 
Frequently Used Shortcuts in Judging
Others- Stereotyping
 Judge someone on the basis of our
perception of the group to which he
or she belongs
 Generalization has advantages!

Success in the past
 Women Vs. Men
 Relocation, Childcare
 Profiling- Arab descant!
Balance
Adeyl Khan, Faculty, BBA, NSU
Shortcuts in Organizations
 Employment Interview (1/10th Second, 4/5 mins)
 Perceptual biases affect the accuracy of interviewers’ judgments
 Performance Expectations
 Behave according to Expectation (Students)
 Self-fulfilling prophecy (pygmalion effect): The lower or higher
performance of employees reflects preconceived leader expectations
about employee capabilities.
 Performance Evaluations (Promotion, Pay)
 Appraisals are subjective perceptions. (Vs. Objective)
 Assessment is a subjective judgment subject
Errors
to perceptual distortion and bias
 Employee Effort
• Selective
• Halo
• Contrast
Adeyl Khan, Faculty, BBA, NSU
The Link Between Perceptions and
Individual Decision Making
Empowerment
Reaction
make the issue
even more critical
Perceptions
of the
decision
maker
Is this a problem?
What is acceptable ?
Adeyl Khan, Faculty, BBA, NSU
Outcomes
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Rational Decision-Making Model
 Step follows in a
logical/rational order
 based on thinking through
and weighing up the
alternatives
 Goal
 Maximize outcome
Steps
Adeyl Khan, Faculty, BBA, NSU
Assumptions
1.
Problem clarity
2.
Known options
3.
Clear preferences
4.
Constant preferences
5.
No time or cost constraints
6.
Maximum payoff
Steps 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.
Adeyl Khan, Faculty, BBA, NSU
Optimize
Source: http://en.wikipedia.org/wiki/Rational_planning_model
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How Are Decisions Actually Made in
Organizations
Adeyl Khan, Faculty, BBA, NSU
How Are Decisions Actually Made in
Organizations …
 Identify problems
 Visibility over importance of problem


Pitfalls
Attention-catching, high profile problems
Desire to “solve problems”
 Self-interest (if problem concerns decision maker)
 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.
Adeyl Khan, Faculty, BBA, NSU
Common Biases and Errors
Overconfidence Bias
• Believing too much in our own ability to make
good decisions.
Anchoring Bias
• Using early, first received information as the basis
for making subsequent judgments.
Confirmation Bias
• Using only the facts that support our decision.
Adeyl Khan, Faculty, BBA, NSU
Common Biases and Errors
Availability Bias
• Using information that is most readily at hand.
• Recent , Vivid
Representative Bias
• “Mixing apples with oranges”
• Assessing the likelihood of an occurrence by trying to match it with a
preexisting category using only the facts that support our decision.
Winner’s Curse
• Highest bidder pays too much
• Likelihood of “winner’s curse” increases with the number of people in
auction.
Adeyl Khan, Faculty, BBA, NSU
Common Biases and Errors
Adeyl Khan, Faculty, BBA, NSU
Common Biases and Errors
 Randomness Error
 Creating meaning out of random events
 Hindsight Bias
 Looking back, once the outcome has occurred, and
believing that you accurately predicted the outcome
of an event

9/11 Prediction
Adeyl Khan, Faculty, BBA, NSU
Adeyl Khan, Faculty, BBA, NSU
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Intuition
Intuitive Decision Making
• An unconscious process created out of distilled experience.
Conditions Favoring Intuitive Decision Making
•
•
•
•
•
•
•
•
A high level of uncertainty exists
There is little precedent to draw on
Variables are less scientifically predictable
“Facts” are limited
Facts don’t clearly point the way
Analytical data are of little use
Several plausible alternative solutions exist
Time is limited and pressing for the right decision
Adeyl Khan, Faculty, BBA, NSU
Making Choices …
Individual Differences
 Personality
 Escalation of commitment

Facets of Conscientiousness
 Achievement Striving
 Forestall failure
 Dutifulness
 Best for the organization
 Self serving bias

High self esteem
Errors
• Bounded
Rationality
• Common
Biases & Errors
• Intuition
 Gender
 Rumination
 Analyzing decision
 Over-thinking
 Age
Adeyl Khan, Faculty, BBA, NSU
Organizational Constraints
 Managers’ Decisions
 Performance Evaluation (Evaluation criteria)
Division manager Vs. Negative information
 Reward Systems
 Risk aversion at GM (Low profile managers)

 Formal Regulations
 Rules and policies limit the alternative- Franchise
 System-imposed Time Constraints
 Deadlines- New product development
 Historical Precedents
 Past decisions influence current decisions- Budget
Adeyl Khan, Faculty, BBA, NSU
Decision
makers make
action choices
that are favored
by the
organization
Ethics in Decision Making
 Utilitarianism- Outcomes and consequences
 Seeking the greatest good for the greatest number
 Maximizing profit- firing decision (Questionable!)
 Rights
 Respecting and protecting basic rights of individuals
 Protecting Whistle blowers
 Justice
 Imposing/enforcing rules fairly and impartially.
 Equitable distribution of benefits and cost
Adeyl Khan, Faculty, BBA, NSU
Ways to Improve Decision Making
 Analyze situation and adjust decision
 Be aware of biases- limit their impact.
 Rational analysis with intuition –effective
 Enhance personal creativity by looking for novel
solutions or seeing problems in new ways, and using
analogies
Reducing
Bias
and Errors
Novel and Useful Idea
Adeyl Khan, Faculty, BBA, NSU
Reducing Bias and Errors
 Focus on goals.
 Clear goals


Decision making easier
Eliminate options inconsistent w/interests
 Look for information that disconfirms beliefs
 Considering ways we could be wrong

we’re smarter than we actually are
 Don’t try create meaning off
randomness/coincidence
 Increase your options.
 Number and diversity
Adeyl Khan, Faculty, BBA, NSU
Be Creative
The Three Components of Creativity
Adeyl Khan, Faculty, BBA, NSU
Chapter Check-Up: Perception
 It’s your little sister’s senior school party, and she
notices that everyone is wearing the same dress she
has on! Which perceptual shortcut may be
occurring?
Adeyl Khan, Faculty, BBA, NSU
Escalation of
commitment
Representative
bias
Availability
Bias
Hindsight Bias
Chapter Check-Up: Perception
 If all of these perceptual shortcuts happen
unconsciously, how can we keep the stereotypes we
have from interfering with the way we work in group
projects?
 Identify two specific things you could do to help
prevent stereotypes from inhibiting effective group
relationships.
Diversity Training
Adeyl Khan, Faculty, BBA, NSU
Decision Making … Example
 Rashid has just discovered he is double registered
for two classes at the same time and must make a
decision about which one to take this semester. He
considers the
 professor teaching this semester
 the time of the class, and
 the classes his friends are taking.
 when you can take each class again
 costs and benefits for taking each this semester
versus later next year.
 He then makes his decision. You just engaged in
_____________________ ?
Adeyl Khan, Faculty, BBA, NSU
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Adeyl Khan, Faculty, BBA, NSU
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