Essentials of

Organizational Behavior,
10/e

Stephen P. Robbins & Timothy A.

Judge

Perception and
Individual Decision
Making
3-1
 After studying this
chapter, you should be
able to:
1. Define perception and explain the factors that
influence it.
2. Identify the shortcuts individuals use in making
judgments about others.
3. Explain the link between perception and
decision making.
4. List and explain the common decision biases or
errors.
5. Contrast the three ethical decision criteria.
6. Define creativity and discuss the three-
component model of creativity.
3-2
 Perception

A process by which
individuals organize and
interpret their sensory
impressions in order to give
meaning to their
environment.
The world as it is perceived
is the world that is
behaviorally important.
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Factors Influencing
Perception

3-4
 Person Perception:
Attribution Theory
Suggests that perceivers try to
“attribute” the observed behavior to a
type of cause:

 Internal – behavior is believed to be

under the personal control of the
individual
 External –the person is forced into the
behavior by outside events/causes
3-5
 Determinants of
Attribution
Distinctiveness – whether an individual
displays different behaviors in
different situations (the uniqueness
of the act)
Consensus – does everyone who faces
a similar situation respond in the
same way as the individual did
Consistency – does the person respond
the same way over time
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Determination of
Attribution

3-7
 Attribution Errors

• Fundamental Attribution Error

The tendency to underestimate the influence of
external factors and overestimate that of internal
factors.

• Self-Serving Bias
Occurs when individuals overestimate their own
(internal) influence on successes and overestimate
the external influences on their failures.
3-8
 Shortcuts Used in Judging
Others
• Selective Perception – a perceptual filtering
process based on interests, background, and
attitude. May allow observers to draw unwarranted
conclusions from an ambiguous situation.
• Halo Effect – drawing a general impression based
on a single characteristic.
• Contrast Effects – our reaction is influenced by
others we have recently encountered (the context
of the observation).
• Stereotyping – judging someone on the basis of
the perception of the group to which they belong.

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 The Link Between
Perceptions and
Individual Decision
ProblemMaking
A perceived discrepancy
between the current state
of affairs and a desired Perception
Perception
of
ofthe
the
state.
decision
decision
Decisions maker
maker
Choices made from
among alternatives
developed from data
perceived as relevant.
Outcomes

5–10
The Link Between Perception
and Decision Making
Decision making occurs as a reaction
to a perceived problem
•Perception influences:
 Awareness that a problem exists
 The interpretation and evaluation of
information
 Bias of analysis and conclusions

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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.
Seldom actually used: more of a goal than a
practical method

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Assumptions of the Model
• Complete knowledge of the
situation
• All relevant options are known in
an unbiased manner
• The decision-maker seeks the
highest utility

3-13
 Bounded Rationality
The limited information-processing capability of
human beings makes it impossible to assimilate
and understand all the information necessary to
optimize
So people seek solutions that are satisfactory
and sufficient, rather than optimal (they
“satisfice”)
Bounded rationality is constructing simplified
models that extract the essential features from
problems without capturing all their complexity
3-14
 Decision Making in
Bounded Rationality
Simpler than rational decision making,
composed of three steps:

1. Limited search for criteria and alternatives –

familiar criteria and easily found
alternatives
2. Limited review of alternatives – focus
alternatives, similar to those already in
effect
3. Satisficing – selecting the first alternative
that is “good enough”
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 Intuitive Decision Making

• An non-conscious process
created out of distilled
experience
• Increases with experience
• Can be a powerful
complement to rational
analysis in decision
making
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 Common Biases and
Errors
• Overconfidence Bias
As managers and employees become more
knowledgeable about an issue, the less likely they
are to display overconfidence
• Anchoring Bias
A tendency to fixate on initial information and fail to
adequately adjust for subsequent information
• Confirmation Bias
Seeking out information that reaffirms our past
choices and discounting information that
contradicts past judgments

3-17
 Common Biases and
Errors
• Availability Bias
The tendency to base judgments on information that
is readily available
• Escalation of Commitment
Staying with a decision even when there is clear
evidence that it is wrong
• Hindsight Bias
The tendency to believe falsely that we could have
accurately predicted the outcome of an event
after that outcome is already known
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 Organizational
Constraints on Decision
Making
• Performance evaluations
• Reward systems
• Formal regulations
• Self-imposed time constraints
• Historical precedents

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Ethical Frameworks for
Decision Making
Utilitarian
 Provide the greatest good for
the greatest number
Rights
 make decisions consistent
with fundamental liberties
and privileges
Justice
 impose and enforce rules
fairly and impartially so that
there is equal distribution of
benefits and costs
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 Creativity in Decision
Making
The ability to produce
novel and useful ideas
•Helps people to:
 Better understand the problem
 See problems others can’t see
 Identify all viable alternatives
 Identify alternatives that
aren’t readily apparent

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Three-Component Model of
Creativity

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 Global Implications

Attributions:
 Cross-cultural differences exist – especially in
collectivist traditions
Decision Making:
 Cultural background of the decision maker can
have significant influence on decisions made
Ethics:
 No global ethical standards exist
 Need organizational-level guidance

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Implications for Managers

Perception:
 To increase productivity, influence workers’
perceptions of their jobs

To improve decision making:

1. Analyze the situation
2. Adjust your decision approach
3. Be aware of biases and minimize their
impact
4. Combine rational analysis with intuition
5. Try to enhance your creativity
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 Keep in Mind…
1. People have inherent biases in
perception and decision making
• Understanding those biases allows for
better prediction of behavior
2. Biases can be helpful
• Managers must determine when the bias
may be counterproductive
3. Creativity aids in decision making
• Helps to appraise, understand, and
identify problems

3-25
 Summary

1. Defined perception and explained the factors

that influence it.
2. Identified the shortcuts individuals use in
making judgments about others.
3. Explained the link between perception and
decision-making.
4. Listed and explained the common decision
biases or errors.
5. Contrasted the three ethical decision criteria.
6. Defined creativity and discussed the three-
component model of creativity.
3-26