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Perception and Decision Making

Hui WANGGuanghua School of Management

Peking University Email: wanghui@gsm.pku.edu.cn

Tel: 62753645 9 Oct. 2002

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Issues for Today What is Perception, and Why is it Important? Factors Influencing Perception Person Perception: Making Judgments about

Others The Link between Perception and Individual

Decision Making How should Decisions be Made? How are Decisions Actually Made in

Organizations? How to Improve Quality of Decision?

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Perception What is Perception?

A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Why is it Important? Because people’s behavior is based on

their perception of what reality is, not on reality itself.

The world that is perceived is the world that is behaviorally important.

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Factors Influencing Perception

Perceiver: The person trying to interpret some observation that he or she has just made.

Target: Whatever the perceiver is trying to make sense of.

Situation: The context in which the perception takes place.

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Factors in the Perceiver•Schema•Motives•Interests•Experience•Expectations

Factors in the Perceiver•Schema•Motives•Interests•Experience•Expectations

Factors in the situation•Time•Work setting•Social setting

Factors in the situation•Time•Work setting•Social setting

Factors in the target•Novelty•Motion•Sounds•Size•Background•Proximity

Factors in the target•Novelty•Motion•Sounds•Size•Background•Proximity

PerceptionPerception

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Characteristics of the Perceiver That Affect Perception

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Schemas

Schemas: Abstract knowledge structures that are stored in memory and make possible the organization and interpretation of information about targets of perception.

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Motivational State and Mood

Motivational State: The needs, values, and desires of a perceiver at the time of perception.

Mood: How a perceiver feels at the time of perception.

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Interpersonal Perception Emotion and Feeling Behaviors Personality

Past Experience Sibling

Impression Management First Impression

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Perceptual Judgment Experimentby P.R.Wilson (1968)

Information Average Estimated Height

1. A student 5’ 9.9” 2. Demonstrator 5’ 10.4”3. Lecturer 5’ 10.9”4. Senior Lecturer 5’ 11.6”5. Professor Jones 6’ 0.3”

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Perception Biases and Problems

Selective Perception Halo Effect Contrast Effects Projection Stereotyping

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Selective Perception

selectively interpret what see based on own interests, background, experience, and attitudes.

Dearborn & Simon (1958)

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Halo Effect

The perceiver’s general impression of a target distorts his or her perception of the target on specific dimensions.

Dion (1972)’s Experiment

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Contrast Effects

The perceiver’s perceptions of others distort the perceiver’s perception of a target.

深陷的双眼证明内心的仇恨，突出的下巴证明沿犯罪的道路走到底的决心；

深陷的双眼表明思想的深度，突出的下巴表明在知识的道路上克服困难的意志力。

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Projection

attribute own characteristics to others.

Schiffenbauer (1974)

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Stereotyping

judge someone on the basis of the perception of the group to which they belong instead of their own characteristics.

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Specific Applications in Organization

Employee interview Performance expectation

Self-fulfilling prophecy or pygmalion effect: When one person inaccurately perceives a second person and the resulting expectations cause the second person to have in ways consistent with the original perception.

Employee evaluation

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Attribution Theory

When individuals observe behavior, they attempt to determine whether it is internally or externally caused.

Heider (1957) Weiner (1974) Kelley (1967)

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Types of Attributions

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Internal vs. External and Stable vs. unstable

Internal External

Stable Ability Task Difficulty

Unstable Effort Luck

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Attribution of Cause

InterpretationObservation

Attribution Attribution

Theory andTheory and

IndividualIndividual

BehaviorBehavior

ExternalExternal

ExternalExternal

ExternalExternal

InternalInternal

InternalInternal

InternalInternal

DistinctivenessDistinctiveness

ConsensusConsensus

ConsistencyConsistency

HighHigh

HighHigh

HighHigh

LowLow

HighHigh

LowLow

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Sources of Information

Internal attribution if low consensus, low distinctness, high consistency

External attribution if high consensus, high distinctness, high consistency

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Attributional Biases

Fundamental attribution error - the tendency to over-attribute behavior to internal rather than external causes.

Actor-observer effect - the tendency to attribute the behavior of others to internal causes and to attribute one’s own behavior to external causes.

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Attributional Bias

Self-serving attribution - the tendency to:

perceive own success as internal and failures as external.

perceive others success as external, and failure as internal

take credit for successes and avoid blame for failures.

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Decision Making

The process by which members of an organization choose a specific course of action to respond to both problems and opportunities.

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The Decision-Making Process

Rational Model of Decision Making

Bounded Rationality Implicit Favorite Model Intuitive Model

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Rational Model of Decision Making

A prescriptive approach based on the assumptions that the decision maker has all the necessary information and will choose the best possible solution or response.

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Rational Model of

Decision Making

Problem

Identify andDefine Problem

DevelopAlternatives

A1

A2

A3

A4

An

EvaluateAlternatives

+

A1 A1

A2 A2

An An

Criteria

Weightthe Criteria

T E C H

Set DecisionCriteria

Choice

Make OptimalDecision

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Assumptions of the Rational Model

Problem clarity. Known options. Clear preferences. Constant preferences. No time or cost constraints. People choose maximum payoff. People have very high computational

abilities

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Bounded Rationality

Bounded Rationality: People’s ability to reason is constrained by the limitations of the human mind itself. If a problem is too complicated people simplify it and use satisficing

Satisficing: Searching for and choosing the first acceptable response or solution, not necessarily the best possible one.

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Implicit Favorite Model Early in the decision process,

decision maker implicitly selects a preferred alternative. Then the rest of the decision process is essentially a decision confirmation exercise, where the decision makers makes sure his/her implicit favorite is indeed the “right” choice.

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Intuitive Model

an unconscious process created out of distilled experience.

intuition is often based on accumulated experiences which allow one to recognize patterns.

Main problem: since the criteria are not open to examination, intuition is often strongly influenced by perceptual biases.

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Intuitive Decision Making most common under conditions of

High uncertainty levels Little precedent Hard to predictable variables Limited facts Unclear sense of direction Analytical data is of little use Several plausible alternatives Time constraints

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Exercise(2): Decision Making

Introduction Individual Judgment Group Judgment Difference between You and Expert Difference between Your Group

and Expert Summary

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Sources of Error in Decision Making

Perceptual Biases Heuristics

Availability Representitiveness Anchoring

Escalation of Commitment

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Heuristics:

Rules of thumb that simplify decision making.

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Heuristics and the Biases They May Lead To

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Availability Heuristic The rule of thumb that says an

event that is easy to remember is likely to have occurred more frequently than an event that is difficult to remember.

Potential bias is overestimating the frequency of vivid, extreme, or recent events and causes.

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Availability Biases

Vividness and Recency individuals judge events that are

easier to remember to be more numerous than events that are difficult to remember

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Representativeness Heuristic

The rule of thumb that says similar kinds of events that happened in the past are a good predictor of the likelihood of an upcoming event.

Potential bias is failure to take into account base rates and overestimating the likelihood of rare events.

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Representativeness Biases

Insensitivity to base rates individuals tend to ignore base rates in

assessing the likelihood of events when other descriptive information is present, even if that other information is irrelevant

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Anchoring and Adjustment Heuristic

The rule of thumb that says that decisions about how big or small an amount should be/ can be made by making adjustments from some initial amount.

Potential bias is inappropriate decisions when initial amounts are too high or too low.

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Anchoring and Adjustment Biases

Insufficient anchor adjustment individuals make estimates for values

based on some initial value, even when the initial value is irrelevant

Overconfidence individuals tend to be overconfident

of the infallibility of their judgements when answering difficult questions

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One Additional Biases

Hindsight Bias after finding out the correct outcome

of an event, individuals tend to overestimate the extent to which they would have predicted that outcome

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Escalation of Commitment

Increased commitment to a previous decision in spite of negative information

The tendency to invest additional time, money, or effort into what are essentially bad decisions or unproductive courses of action.

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The Three Components of Creativity The Three Components of Creativity

Expertise

TaskMotivation

CreativitySkills

Creativity

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Analytic Conceptual

BehavioralDirective

Rational IntuitiveWay of Thinking

High

Low

To

lera

nce

fo

r A

mb

igu

ity

Decision-Making StylesDecision-Making Styles

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Summary and Implications for Managers

Perception Individuals behave based not on the way their

external environment actually is but, rather, on what they see or believe it to be.

What individuals perceive from their work situation will influence their productivity more than will the situation itself.

Absenteeism, turnover, and job satisfaction are also reactions to the individual’s perceptions.

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Summary and Implications for Managers

Individual Decision Making Individuals think and reason before they act. Under some decision situations, people follow the

rational decision-making model. What can managers do to improve their decision

making? Analyze the situation. Be aware of biases. Combine rational analysis with intuition. Don’t assume that your specific decision style is

appropriate for every job. Use creativity-stimulation techniques.