PERCEPTION AND INDIVIDUAL

DECISION MAKING

What is perception and why is it important?

• Perception : A process by which an individuals organize and interpret their sensory impressions in order to give meaning to their environment

• People’s behavior is based on their perception of what reality is, not reality itself.

• The world as it is perceived is the world that is behaviorally important.

Factors That Influence Perception:

Person Perception : Making Judgements About Others

• Attribution theory : When people observe behavior , they attempt to determine if it is internally or externally caused.

• This determination is based on the following factors: 1.Distinctiveness :Showing different behavior in different situations 2.Consensus :Responds in the same way as others to the same situation 3.Consistency : Responds in the same way over time

Attribution theory

Common shortcuts in judging others:

• Selective perception : people selectively interpret what they see on the basis of one’s interests, background, experience, and attitudes.

• Halo effect :Drawing a general impression about an individual on the basis of a single characteristic.

Common shortcuts in judging others(cont.)

• Contrast Effect: 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.

• Stereotyping : Judging someone on the basis of one’s perception of the group to which that person belongs.

• Projection : Attributing one’s own characteristics to other people.

The link between perception and decision making:

Assumptions of rational decision making model:

• A decision making model that describes how individuals should behave to maximize some outcome.

Common biases and errors :

• Overconfidence bias• Anchoring bias• Confirmation bias• Availability bias• Representative bias• Winner’s curse• Escalation of commitment• Hindsight bias• Randomness error

INFLUENCE OF DECISION MAKING: Individual differences and organizational constraints

• Individual differences:1.Personality2.Gender3.Mental ability4.Cultural differences

INFLUENCE ON DECISION MAKING : Individual differences and organizational constraints(cont.)

• Organizational constraints:1.Performance evaluation2.Reward system3.Formal regulations4.System-imposed time constraints5.Historical precedence

ETHICS IN DECISION MAKING

• Three ethical decision criteria:1.Utilarianism: Decisions are made to provide the greatest good for the greatest number.2. Rights: Respecting and protecting basic rights of individuals such as whistleblowers3. Justice: Imposing and enforcing rules fairly and impartially

Ways to improve decision:• Analyze the situation and adjust your decision making 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 problems.