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Perception and Individual Decision-Making

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Perception and Individual decision-making (Robertson)

Perception

Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. However, what we perceive can be substantially different from objective reality. People’s behaviour is based on their perception of what reality is, not reality itself.

Factors that influence it

Attribution theory The attribution theory is an attempt to determine whether an individual’s behaviour is internally or externally caused. Internally caused behaviours are those we believe to be under the personal control of the individual whereas externally caused behaviour is what we imagine the situation forced the individual to do. * Determinants of attribution

1. Distinctiveness: what we want to know is whether behaviour is unusual, if so we are likely to give it an external attribution. If not we will probably judge the behaviour to be internal. 2. Consensus: behaviour shows consensus when everyone who faces a similar situation responds in the same way. If consensus is high you will probably give an external attribution to the individual’s behaviour whereas if the consensus is low it will be attributed to an internal cause. 3. Consistency: does the person respond the say way over time? The more consistent the behaviour is the more we are inclined to attribute it to internal factors.

Errors and bias that distort attribution: Fundamental attribution error: the tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgements about the behaviour of others.

Self-serving bias: the tendency for individuals to attribute their own successes to internal factors and put the blame for failures on external factors.

Shortcuts used by individuals in making judgements about others

We use a number of shortcuts when we judge others. These techniques allow us to make accurate perceptions rapidly and provide valid data for making decisions. Understanding these shortcuts can help you recognise when they can result in significant distortions.

Selective perception: the tendency to selectively interpret what one sees on the basis of one’s interests, background, experience and attitudes.

Halo effect: the tendency to draw a general impression about an individual on the bases of a single characteristic.

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: judgying someone on the basis of one’s perception of the group to which that person belongs. Profiling occurs when a group of individuals is singled out (ex. Race or ethnicity) for intensive inquiry, scrunity or investigation
Application in the organization: Employment interview, performance expectations*, and performance evaluations.

* 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.

Link between perception and decision making

Individuals in organizations make decisions. That is, they make choices from among two or more alternatives. Individual decision-making is an important part of organizational behaviour. But how individuals in organizations make decisions and the quality of their final choices are largely influenced by their perceptions.

Decision-making occurs as a reaction to a problem. That is, a discrepancy exists between the current state of affairs and some desired state, requiring us to consider alternative courses of action.

The awareness that a problem exists and whether a decision needs to be made is a perceptual issue.

Models of decision making

Rational model: a decision-making model that describes how individuals should behave in order to maximise the outcome given specific constraints. The rational decision making model relies on a number of assumptions, including that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. Most decisions in the real world don’t follow the rational model. Most significant decisions are made by judgement, rather than by a defined prescriptive model. What’s more, people are remarkably unaware of making suboptimal decisions.

Bounded rationality: a process of making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.

Intuitive decision-making: a non conscious process created from distilled experience. It relies on holistic associations, or links between disparate pieces of information; it’s fast, and it’s affectively charged.

Common decision biases/errors

In many instances, shortcuts are helpful; however, they can lead to severe distortions of rationality (BIASES)

OVERCONFIDENCE bias: the tendency to be far too optimistic when we are given factual questions by judging that our anwers are correct.

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 discount information that contradicts them.

AVAILABILITY bias: the tendency for people to base their judgements on information that is readily available to them.

ESCALATION OF COMMITMENT: an increased commitment to a previous decision in spite of negative information.

RANDOMNESS error: the tendency of individuals to believe that they can predict the outcome of random events.

WINNER’S CURSE: a decision-making dictum which argues that the winning participants in an auction typically pay to much for the winning item.

HINDSIGHT bias: the tendency to believe falsely, after an outcome of an event is actually know, that one would have accurately predicted the outcome.

How do Individual differences and organizational constraints affect decision-making?

Individual differences: they create deviations from the rational model.
Personality:

Achievement-striving people are more likely to escalate their commitment hoping to forestall failure because they hate to fail whereas dutiful people were less likely because they are more inclined to do what they see as best for the organization.

Achievement-striving people appear are more susceptible to the hindsight bias because they have a greater need to justify appropriateness of their actions.

People with high self-esteem appear to be especially susceptible to the self-serving bias because they are strongly motivated to maintain their self-esteem hence they blame others for their failures while taking credit for successes.

Gender:
Woman analyse more than men do and they are more likely to overthink problems and to rehash a decision once it’s been made.

Organizational constraints: managers shape their decisions to reflect the organization’s performance evaluation and reward system, to comply with the organization’s formal regulations and to meet the organizationally imposed time constraints. Previous organizational decisions also act as precedents to constrain current decisions.

Performance evaluation: managers are strongly influenced in their decision making by the criteria on which they are evaluated.

Formal regulations: all the organizations create rules and policies to programme decisions, which are intended to get individuals to act in the intended manner limiting the decision maker’s choices.

System-imposed time constraints: organizations impose deadlines on decisions. These conditions create time pressures on decision makers and often make it difficult, if not impossible, to gather all the information they might like to have before making a final choice.

Rewards systems: it influences decision makers by suggesting to them what choices are preferable in terms of personal payoff.

Historical precedents: commitments that have already been made constrain current options. Choices made today, are largely a result of choices made over the years.

Three ethical decision criteria

Utilitarianism: a system in which decisions are made to provide the greatest good for the greatest number. It is consistent with goals such as efficiency, productivity and high profits. By maximising profits, for instance, a business executive can argue that he is securing the greatest good for the greatest number as he hands out dismissal notices to 15 per cent of his employees. It can result on ignoring the rights of some individuals, particularly those with minority representation in the organization.

RIGHTS FOCUSED: it calls on individuals to make decisions consistent with fundamental liberties and privileges. An emphasis on rights in decision making means respecting and protecting the basic rights of individuals such as the right of privacy, to free speech and to due process. It can create an overly legalistic work environment that hinders productivity and efficiency.

Justice focused: it requires individuals to impose and enforce rules fairly and impartially so that there is an equitable distribution of benefits and costs. Union members typically favour this view. It justifies paying the same wage for a given job regardless of performance differences, and using seniority as the primary determination in layoff decisions. It can encourage a sense of entitlement that reduces risk taking and productivity.

Creativity

A rational decision maker also needs creativity, that is, the ability to produce novel and useful ideas. These are ideas that are different from what’s been done before but that are appropriate to the problem or opportunity presented. It allows the decision maker to more fully appraise and understand the problem, including seeing problems other can’t see. Such thinking is becoming more important. Creativity has become a driving force for economic growth.

Three component model of creativity

The proposition that individual creativity requires expertise, creative thinking skills and intrinsic task motivation. The higher the level of these three components the higher the creativity.

Expertise: the potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies, and similar expertise in their field of endeavour.

Creative-thinking skills: this encompasses personality characteristics associated with creativity, the ability to use analogies, and the talent to see the familiar in a different light.

Intrinsic task motivation: this is the desire to work on something because it’s interesting, involving, exciting, satisfying or personal challenging. This component is what turns creativity potential into actual creative ideas. It determines the extent to which individuals fully engage their expertise and creative skills.

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