Perception and Decision-Making

The Issues

Perceptual Process and phenomenaChoice making, decision making, & problem solvingOptimizing, maximizing, & satisficingDecision modelsIndividual v. group decisionsDecision-Making Phenomena Decision-making tools

PERCEPTION

Process through which a person senses, selects, organizes, and interprets stimuli

Selection

Organization

Interpretation

Sensation

Person Perception: Making Judgments About Others

Distinctiveness: shows different behaviors in different situations.

Consensus: response is the same as others to same situation.

Consistency: responds in the same way over time.

Distinctiveness: shows different behaviors in different situations.

Consensus: response is the same as others to same situation.

Consistency: responds in the same way over time.

Attribution theoryWhen individuals observe behavior, they attempt to determine whether it is internally or externally caused

Attribution Process

COMMON PERCEPTUAL PHENOMENA

Fundamental attribution errors

Self serving bias

Selective perception

Halo effect

Contrast effect

Stereotypes

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.

Self-serving biasThe tendency for individuals to attribute their own success to internal factors while putting blame for failures on external factors.

Frequently Used Shortcuts in Judging Others

Selective perceptionPeople selectively interpret what they see on the basis of their interests, background, experience, and attitudes.

StereotypingJudging someone on the basis of one’s perception of the group to which that person belongs.

Frequently Used Shortcuts in Judging Others

Halo 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.

Choice Making

The narrow set of activities associated with choosing one option from among already identified alternatives

Decision Making

The process of specifying a problem or opportunity, identifying alternatives & criteria, evaluating alternatives, and selecting from among the alternatives

Site 1Pros/Cons

Site 2Pros/Cons

Problem Solving

Includes decision-making processImplementation of decisionMonitoring of impactRevising actionAchieving objectives

Decision Making, Choice Making, and Problem Solving

Step 1

Recognizing

the need

for a

decision

Step 2

Generating

alternative

solutions

Step 3

Evaluatingthealternatives

Step 4

Choosing an

alternative

Step 5

Implementing

the chosen

alternative

Step 6

Monitoring

and main-

taining the

solution

Decision Making

Problem Solving

Choice Making

Decision Standards

OptimizeFind the best possible decision

MaximizeFind decision that meets maximum number of criteria

SatisficeFind the first satisfactory solution

Decision Models

The rational/economic personPerson is rational and deals with objective factsPerson is economically motivatedDecisions are driven by objective rationality and a search for the best possible alternative (optimizing)

The administrative person (Herbert Simon)Person is limited by restricted cognitive capacityPerson is aware of only certain alternativesPerson considers only certain criteriaDecisions are driven by desire to identify and select the first acceptable alternative (satisficing)

AdvantagesGreater knowledge and facts

Broader perspectives on issues

More alternatives considered

Greater satisfaction with and support of decisions

Better problem comprehension

DisadvantagesLess speedCompromise may damage decision qualityPremature decisionsNegative social pressureIndividual dominationInterference of personal goals

Groups vs. Individuals?

Decision-Making Phenomena

Group shift (risky, cautious)GroupthinkEscalation of commitment

Group ShiftThe risky shift

Group discussion makes decision situation more familiarDiffusion of responsibilityRisk persuadersCultural values and desire for approval from others in the group

The cautious shift Far less common than risky shiftGroup discussion makes decision risks more clearPersonal acceptance of responsibilityCautious persuadersCultural values and desire for approval from others in the group

Groupthink

A group drive for consensus so strong that dissent is (intentionally and unintentionally) suppressed

Escalation of Commitment

Adhering to an unsuccessful course of action with increasing commitment of resources

Modeling

Retrospective

Rationality

Norms for consistency

Factors That Drive Escalation

Motivation to justify previous decisions

Commitment to a Course of Action

Perceived probability of future outcomes

Perceived value of future outcomes

Based on Staw, B.M. (1981). The escalation of commitment to a course of action. Academy of Management Review, 6 (4), p. 582.

Prospective

Rationality

Other Escalation Considerations

What about the following?Involvement in original decisionIndividual vs. group decisionOrganization culture differences

Recommendation for managers?

Some Valuable Tools

Nominal Group Technique

Brainstorming

Delphi Technique

Brainstorming

Stimulate people to develop alternatives during the planning and decision-making process. Focus on identifying alternatives.

Nominal Group Technique (NGT)

Generate a large number of creative potential solutions to a problem or opportunity, evaluate these solutions, and rank them from most to least promising

4-stopsGeneration of ideas in writingRound-robin recording of ideasSerial discussion of ideasRanking of ideas

1.2.3.4.5.6.

Delphi TechniqueGathers and evaluates information from a group without physically assembling its members

StepsDevelop the Delphi question and the first inquiryCollect first responseAnalyze first response, provide feedback, and develop second inquiryCollect second responseContinue process until a clear solution emerges

The Issues

Perceptual Process and phenomenaChoice making, decision making, & problem solvingOptimizing, maximizing, & satisficingDecision modelsIndividual v. group decisionsDecision-Making Phenomena Decision-making tools