Organizational

Behavior
HROB 502

Lecture 5
Dr. Menatallah Darrag
 Lecture 5- Chapter 4
Perception & Individual Decision Making
  Define perception and explain the factors that influence it.
 Explain attribution theory & list the three determinants of

Chapter Learning
attribution.
 Identify the shortcuts that individuals use in making judgments
about others.

Objectives  Explain the link between perception & decision making.

 Apply the rational model of decision making & contrast it with
bounded rationality & intuition.
 List the common decision biases or errors.
 Explain how individual differences and organizational constraints
affect decision making.
 Define creativity and discuss the three-component model of
creativity.
What is the first thought you
have as you see this
picture?
An optical illusion may have you look at this picture and see a it in a way, while someone else may see it
in another way (the same picture), simply identified as different perceptions.
You can not make the assumption that everyone sees what you see.
 What Is Perception?
Why is it important?

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

People’s behaviors are based on their perception of what reality is, not on reality itself.

The world as it is perceived, is the world that is behaviorally important.

That’s why it’s important to understand perceptions, its errors as both affect the decision making
processes of individuals.
 /Processing /Behavior /Action

Perception
Process
Factors influencing Perception
Process
Person

E.g.
• In a work setting, what
are the odds that you
notice someone dressed
up for a night out?
Context
• In a classroom setting,
how often do you notice
loud people versus quiet
ones?

Object
Attribution Theory: Judging Others
• Attribution theory attempts to explain the ways in which we judge people
differently, depending on the meaning we attribute to a given behavior.

• Each individual holds his own values, motives & intentions. Building on that, each
tries to observe and rationalize the behaviors of others.

• Our perception and judgment of others is significantly influenced by our

assumptions of the other person’s internal state (the way we see them) and how
we feel they usually behave.
 Attribution Theory: Judging Others
Three factors intervene in determining the causation of the attitude (be it internally or
externally attributed) and they constitute the elements of the theory:
Distinctiveness: whether an individual shows different behaviors in different situations
Consensus: whether an individual responds in the same way as others being subjected to
the same situation
Consistency: whether an individual responds in the same way over the time
 Example of an attitude to be interpreted:
Nervousness in an interview

For Distinctiveness:
An individual always exhibits nervousness (low): internal
An individual exhibits nervousness only through interviews (high):
external

For Consensus:
Different individuals get nervous (high): external
Only one individual gets nervous (low): internal

For Consistency:
An individual exhibits nervousness in any interview (high): internal
An individual exhibits nervousness in only one interview (low):
external
 Errors and Biases in Perception and
Attributions
Every person takes in, processes, analyzes and reacts to information/input differently that others.
This is related to his/her perception.

• A person could be subconsciously biased based on how he/she perceived information (Perceptual
Biases) – what is seen and heard.

• A person could be biased; to a larger degree; as he/she try to develop a causal effect from the
input he/she had acquired (Attribution Biases).
 Errors and Biases in Perception and
Attributions
Fundamental Attribution Error
• The tendency to underestimate the influence of external factors and overestimate the
influence of internal factors when making judgments about the behavior of others
We blame people first, not the situation

E.g. Sales managers attributing low sales level to laziness of sales reps rather than to a
competitor’s counter competitive product line introduction to the market!
Errors and Biases in Perception and
Attributions

• The tendency for individuals to attribute their own successes to

internal factors while putting the blame for failures on external
factors.

It is ‘our’ success but ‘their’ failure.

 Frequently Used Shortcuts
in Judging Others
 In thinking, individuals tend to make shortcuts that help them to have valid
data and reach perceptions more rapidly. In such cases these shortcuts are
valuable and positive. Nonetheless, sometimes they can lead to biases!

 Hence, it is important to know these shortcuts to identify them upon

occurrence and set their implications on individuals’ perceptions and further
decision makings and behaviors to follow.
Selective Perception

• Selective perception usually applies when an

individual, object or an event stands out in
comparison to others.

• An individual can not observe everything

happening around him/her, thus we engage in
selective perception or in other words, we take
in bits & pieces.

• What people select to interpret is not random,

but they tend to select what they see on the
basis of their interests, background,
experience, and attitudes.
https://www.youtube.com/watch?v=vJG698U2Mvo
Halo and/or Horn Effects
• Drawing a general positive impression about an individual
on the basis of a single characteristic such as intelligence,
sociability or appearance (halo effect).

• If such impression is generally negative, it is built on a

negative characteristic such as general poor appearance or
poor social skills or low intelligence. In these cases it is
known as the (horn effect).

• In other words, one single trait dominates our impressions

and hence formulates perceptions and judgments about
individuals. Physical attractiveness is a major factor
contributing to the (halo effect).
Contrast Effects
• Evaluation of a person’s characteristics that are affected by comparisons with other
people recently encountered who rank higher or lower on the same characteristics.

• Judging someone on the basis of one’s perception of the group to which that person
belongs—a prevalent and often useful, if not always accurate, generalization (e.g.
Females being stereotyped!).

 A form of stereotyping in which members of a group are singled out for intense scrutiny
based on a single, often racial, trait (e.g. Arab-Muslims being stereotyped against).
 Specific Shortcut Applications
in Organizations
 In everyday transactions, people use perceptions and judgments in organizations. Some examples
could be:
 a new employee judging the team and individuals he is joining; or
 an established employee judging the level of effort & output of his coworkers; or
 a manager is judging the performance level and appraising his employees, etc.

1. Employment Interview
• Perceptual biases affect the accuracy of interviewers’ judgments of applicants.
• Interviewers often draw on early impressions that very quickly become stuck in their heads!
• Such impressions are formed in a single glance of a second (1/10th)!
• Accordingly:
1. Information relayed towards the beginning of the interview is more important than those received
towards the end
2. A ‘good candidate’ usually lacks bad characteristics rather than exhibit good characteristics
 Specific Shortcut Applications
in Organizations
2. Performance Expectations or Self-fulfilling prophecy (Pygmalion effect):
• The lower or higher performance of employees reflects preconceived leader
expectations about employee capabilities.
• In short, people attempt to validate their perceptions of reality even if the
perceptions are faulty!

3. Performance Evaluations:
• Appraisals are often the subjective (judgmental) perceptions of appraisers of
another employee’s job performance.
• It has critical impact on employees’ appraisals, pay raises, and continuation of
employment.
• Subjective evaluations are prevalent & they can embed different biases in
perceptions discussed earlier.
 Perceptions and Individual
Decision Making
 Inside organizations, individuals take decisions; where those decisions are usually built on the prevalence of
problems.
 Problem: A perceived discrepancy between the current state of affairs and a desired state.
 Decisions: Choices made from among alternatives; two or more; developed from data.

 In the past, this was restricted to managerial levels only; but recently organizations are empowering their
employees by job-related decision making capacities.

 Perception linkage: All elements of problem identification and the decision making process are influenced
by perception. In other words, perception is key in having:
Problems recognized.
Data selected and evaluated for Decision Making.
Decision-Making Models in Organizations
1. Intuition (Intuitive Decision Making)
•On confronting a crisis or an emergency situation, the luxury of spending time in DM is not available. Thus,
the need to decide and implement decisions quickly arise through this approach, though not the most reliable
one.
•Based on what the situation is, you may have had a strong emotion identified with the event or situation.
•The least reliable way of making decisions.
•A non-conscious process created from distilled experience that results in quick decisions.
•It is not rational, but that doesn’t necessarily make it wrong & many great leaders depend on it.
•It’s characterized by that it is:
•Fast
•Reliant on holistic associations (i.e. links between scattered pieces of information)
•Affectively charged—engaging the emotions
•Occurrence outside conscious thought
Decision-Making Models in Organizations
2. Rational Decision-Making

• The “perfect world” model with assumptions like: assuming complete information availability, all options are
known in an unbiased manner, and maximum payoff is selected yet with no biases.

• Six steps are included in the decision-making process

Decision-Making Models in Organizations
3. Bounded Rationality

• Individuals have limited information-processing capacities and can not assimilate and understand all the
information necessary to handle all situations; especially complex ones needed in problem solving.
• Hence, individuals tend to construct simplified models that extract the essential features from problems
without capturing all their complexities.

• The “real world” model: seeks satisfactory and sufficient solutions from limited data and alternatives.
 Decision-Making Models in Organizations
4. The Three Component Model of Creativity
applied in DM:

• Creativity is the ability to produce novel & useful ideas.

• A successful decision maker needs to posses this ability
& infuse it within the DM process.
• The proposition is that an individual’s creativity results
from a mixture of three components:
1. Expertise is the foundation.
2. Creative Skills are the personality characteristics associated
with creativity.
3. Intrinsic Task Motivation is the desire to do the job because of
its characteristics. This is what makes a difference turning
creativity potential into actual creative ideas.
The higher each of them, the higher the creativity!
 Common Biases and Errors in
Decision Making
Overconfidence Bias

• It is believing too much in your own ability to make good decisions.

• Usually this bias occurs in areas outside areas of expertise.
• Individuals with the weakest intellectual and interpersonal abilities tend to overestimate
their capacities & abilities…thus, as managers become more knowledgeable about a topic
they less tend to commit this bias!
• No problem in judgment & decision making is more dangerous than overconfidence!

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 Common Biases and Errors in
Anchoring Bias
Decision Making
• Using early, first received information as the basis for making subsequent judgments & failure to
adequately adjust for subsequent information.
• It occurs as our minds give disproportionate emphasis to the first information received versus any
other information acquired afterwards.
• This bias especially shows in professions needing high persuasion levels like sales, advertising,
politics & law and with negotiation/bargaining situations.

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 Common Biases and Errors in
Framing Bias
Decision Making
Base our decision on how something is
presented. The impact may be positive or
negative based on the situation. One area that
this has a significant effect is on surveys. How the
question is asked impacts the answer.
• For example, when asked the question
“Would you like to be an organ donor?” only
fifteen percent of the people opted to do
that. When the question was asked “I do not
want to be an organ donor – opting out of
the process,” 90% of people opted to be
donors. It all came down to how the question
was asked.

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 Common Biases and Errors in
Decision Making
Confirmation Bias (case of selective perception)

• Selecting and using only facts that support our decision.

• Individuals do not dwell into rational optimal data collection to

reach decisions. They rather select to collect information &
data that reaffirms past choices and discount/disregard
information & data that contradicts them.

Availability Bias

• The tendency of people to base their judgments on

information that is most readily at hand.

• This explains why managers’ evaluations tend to focus on most

recent employee behaviors rather than retrieving early on
behaviors a time ago.
 Common Biases and Errors in
Escalation of commitment
Decision Making
• Increasing commitment to a decision in spite of evidence that it is wrong—
especially if responsible for the decision!
• So, it is simply staying with a decision even when there is clear evidence that it is
wrong..as individuals deem themselves responsible for the failure; or invested a
lot; they get committed to pursuit the same course of failing action.
Randomness error
� Creating meaning out of random events—superstitions.

� It is the tendency of individuals to believe that they can predict the outcomes of

random events.
� In Arab culture specifically, people depend heavily on God & place their problems in his

Hands. Still, you can always hear words like ‘Insh’Allah’, ‘God willing’ & ‘As God wills’
being paired with this error.

Hindsight bias
� After an outcome is already known, believing it could have been accurately predicted

beforehand.
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 Individual Differences in
Personality Decision-Making
• There is limited research linking personality with DM, probably as DM
researchers lacks knowledge of personality research.
Conscientiousness
⮚ It may effect escalation of commitment.
⮚ Achievement-strivers are likely to exhibit this bias; as well as exhibit
hindsight bias. Why?
Self-Esteem
⮚ High self-esteem people are susceptible to self-serving bias. Why?

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 Individual Differences in
Gender
Decision-Making
• Women analyze decisions more than men due to variances in rumination
(reflecting on the length of time involved in DM).
• Women invest much more time than men in analyzing information form the
past, present and future before reaching a decision. They tend to overanalyze
even, and to reevaluate before taking a final decision. This is likely to lead to
more careful DM & consideration of problems and choices.
• Differences develop early & it is attributed to different opinions as follows:
1. The fact that parents encourage & reinforce girls to express their emotions
rather than boys.
2. Women base their self-esteem & wellbeing on what others think of them.
3. Women are more empathetic & affected by events in others’ lives so they
reflect on DM more than men.
• Women are twice as likely to develop depression.

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Organizational Constraints affecting
decision-making
❑ Historical precedents: Past decisions influence current decisions.
❑ System-imposed time constraints: Restrict ability to gather or evaluate
information.
❑ Formal regulations: Limit the alternative choices of decision makers.
❑ Reward systems: Managers will make the decision with the greatest personal
payoff for them.
https://fitsmallbusiness.com/hiring-bias/

https://traffit.com/en/blog/recruitment-process/interview-bias-prevention/
Lecture Assignment 2:

Based on our earlier discussion of some of the cognitive

biases, to identify some of your own at
https://www.pages.talenttransformation.com/cognitive-
bias/1 (online/individual).

Print your answers with your details (Name, ID and tutorial

number) and hand it to your TA in-class in the assigned class
to further discuss it (check the class planner on CMS).
Thank you. Any questions?