Ch06-Perception DM
Ch06-Perception DM
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Personal
characteristic
or the situation
Factors that shape and can distort perception include the perceiver, the target, or
the situation. When an individual looks at a target and attempts to interpret what
he or she sees, that interpretation is heavily influenced by the personal 6-5
characteristics of the individual perceiver. The more relevant personal
characteristics affecting the perceptions of the perceiver are attitudes, motives,
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interests, past experiences, and expectations.
LO 2 Explain
Attribution Theory and List
the Three Determinants of Attribution
Attribution theory suggests that when we observe
an individual’s behavior, we attempt to determine
whether it was internally or externally caused.
Determination depends on three factors:
Distinctiveness
Consensus
Consistency
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Most decisions in the real world don’t follow the rational model. People
are usually content to find an acceptable or reasonable solution to a
problem rather than an optimal one. Choices tend to be limited to the
neighborhood of the problem symptom and the current alternative.
As one expert in decision making put it, “Most significant decisions are
made by judgment, rather than by a defined prescriptive model.” People
are remarkably unaware of making suboptimal decisions.
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Let’s now take a look at the specific types of biases and errors that can occur in
the decision making process.
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LO 6 Describe the Common
Decision Biases or Errors
Overconfidence Bias
Individuals whose intellectual and interpersonal abilities are
weakest are most likely to overestimate their performance
and ability. Investor overconfidence operates in a variety of
ways. People think they know more than they do, and it
costs them. Investors, especially novices, overestimate not
just their own skill in processing information, but also the
quality of the information with which they’re working.
Anchoring Bias
Fixating on initial information as a starting point and failing
to adequately adjust for subsequent information. Anchors
are widely used by people in advertising, management,
politics, real estate, and law, where persuasion skills are
important. Any time a negotiation takes place, so does 6-24
anchoring.
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LO 6 Describe the Common
Decision Biases or Errors
Confirmation Bias
Type of selective perception.
Seek out information that reaffirms past choices,
and discount information that contradicts past
judgments.
Availability Bias
Tendency for people to base judgments on
information that is readily available.
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