Perception and Individual Decision Making
Dr. Kirti Rajhans
What Is Perception?
➢ A process by which individuals organize and interpret
their sensory impressions in order to give meaning to
their environment.
➢ People’s behavior is 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.
Factors That
Influence
Perception
Attribution Theory: Judging Others
➢ Our perception and judgment of others is significantly
influenced by our assumptions of the other person’s
internal state.
– When individuals observe behavior, they attempt to
determine whether it is internally or externally caused.
• Internal causes are under that person’s control
• External causes are not under the person’s control
➢ Causation judged through:
– Distinctiveness: Shows different behaviors in different
situations
– Consensus: Response is the same as
others to the same situation
– Consistency: Responds in the same way
over time
Elements of Attribution Theory
Errors and Biases in 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
Errors and Biases in Attributions (cont’d)
Self-Serving Bias-
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
Selective Perception
People selectively interpret
what they see on the basis of
their interests, background,
experience, and attitudes
Frequently Used Shortcuts in Judging Others
➢ Halo and Horns Effect
– Drawing a general impression about an
individual on the basis of a single characteristic
➢ Contrast Effect
– 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
Another Shortcut: Stereotyping
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
➢Profiling
– A form of stereotyping in which members of a group
are singled out for intense scrutiny based on a single,
often racial, trait.
Impact of perceptual errors in Organizations
➢ Employment Interview
– Perceptual biases of raters affect the accuracy of
interviewers’ judgments of applicants
– Formed at a single glance: 1/10th of a second!
➢ Performance Expectations
– Self-fulfilling prophecy (Pygmalion effect): The lower
or higher performance of employees reflects
preconceived leader expectations about employee
capabilities
➢ Performance Evaluations
– Appraisals are often the subjective (judgmental)
perceptions of appraisers of another employee’s job
performance
– Critical impact on employees
Influences on Perception
➢ Physiological (biological, neurological) Influences
– Senses, age, health, fatigue, hunger, biological cycles
➢ Social Influences
– Cultural Differences
• Nonverbal behaviors, odors, speech, silence, space
– Social Roles
• Sex roles, gender roles, occupational roles
– Self-Concept
• Self-esteem, locus of control, attribution (attaching meaning to
behavior)
More Common Decision-Making Errors
➢ Escalation of Commitment
– Increasing commitment to a decision in spite of
evidence that it is wrong – especially if responsible for
the decision!
➢ Randomness Error
– Creating meaning out of random events – superstitions
➢ Risk Aversion
– The tendency to prefer a sure gain of a moderate
amount over a riskier outcome, even if the riskier
outcome might have a higher expected payoff
➢ Hindsight Bias
– After an outcome is already known, believing it could
have been accurately predicted beforehand
Summary and Managerial Implications
➢ Perception:
– People act based on how they view their world
– What exists is not as important as what is believed
– Managers must also manage perception
➢ Individual Decision Making
– Most use bounded rationality: they satisfice
– Combine traditional methods with intuition and
creativity for better decisions
• Analyze the situation and adjust to culture and
organizational reward criteria
• Be aware of, and minimize, biases
