Effect of perceptionon decision making 1

Perception &Decision Making : 

Perception &Decision Making

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Think of a time when you noticed something that others didn’t due to your height  When have you seen something differently than others due to your gender    Think of a past experience you have had that shapes how you perceive things/people   Describe a time when you and someone special to you just "saw" something different, due to perception.

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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

Person Perception: Making Decisions : 

Person Perception: Making Decisions 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.

Factors ThatInfluence Perception : 

Factors ThatInfluence Perception

Errors and Biases in Attributions : 

Errors and Biases in Attributions

Errors and Biases in Attributions : 

Errors and Biases in Attributions

Frequently Used Shortcuts in Judging Others : 

Frequently Used Shortcuts in Judging Others

Frequently Used Shortcuts in Judging Others : 

Frequently Used Shortcuts in Judging Others

Frequently Used Shortcuts : 

Frequently Used Shortcuts

The Link Between Perceptions and Individual Decision Making : 

The Link Between Perceptions and Individual Decision Making Perception of the decision maker Outcomes ProblemA perceived discrepancy between the current state of affairs and a desired state. DecisionsChoices made from among alternatives developed from data perceived as relevant.

Assumptions of the Rational Decision-Making Model : 

Assumptions of the Rational Decision-Making Model Model Assumptions Problem clarity Known options Clear preferences Constant preferences No time or cost constraints Maximum payoff Rational Decision-Making Model Describes how individuals should behave in order to maximize some outcome.

Steps in the Rational Decision-Making Model : 

Steps in the Rational Decision-Making Model Define the problem. Identify the decision criteria. Allocate weights to the criteria. Develop the alternatives. Evaluate the alternatives. Select the best alternative.

How Are Decisions Actually Made in Organizations : 

How Are Decisions Actually Made in Organizations Bounded Rationality?

Bounded Rationality : 

Bounded Rationality Bounded rationality is a concept based on the fact that rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make decisions Bounded rationality is that, because decision-makers lack the ability and resources to arrive at the optimal solution, they instead apply their rationality only after having greatly simplified the choices available

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Prentice Hall, 2001 Chapter 5 16 A Model of Bounded Rationality Ascertain the Need for a Decision Simplify the Problem Select Criteria Identify a Limited Set of Alternatives Compare Alternatives Against Criteria Expand Search for Alternatives Select the First “Good Enough” Choice A “Satisficing” Alternative Exists Yes No

Decision Making Styles : 

Decision Making Styles Directive : Low tolerance for ambiguity, seek rationality Analytic: Greater tolerance for ambiguity Conceptual: Broad in outlook,consider many alternative Behavioural: Tend to work well with other

Decision-Style Model : 

Decision-Style Model

Organizational Constraints on Decision Makers : 

Organizational Constraints on Decision Makers Performance Evaluation Reward Systems Formal Regulations System-imposed Time Constraints. Historical Precedents

Exercise II : 

Exercise II Imagine that a particular country is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume the exact scientific estimate of the consequences of the programs are as follows. Group I A: 200 people will be saved B: there is a one-third probability that 600 people will be saved, and a two-thirds probability that no people will be saved

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Group II C : 400 people will die D : there is a one-third probability that nobody will die, and a two-third probability that 600 people will die

Analysis of Exercise : 

Analysis of Exercise 72 percent of participants preferred program A (the remainder, 28 percent, opting for program B). In this decision frame, 78 percent preferred program D, with the remaining 22 percent opting for program C. Programs A and C are identical, as are programs B and D. The change in the decision frame between the two groups of participants produced a preference reversal: when the programs were presented in terms of lives saved, the participants preferred program the secure program, A (= C). When the programs were presented in terms of expected deaths, participants chose the gamble D (= B).

Common Biases and Errors : 

Common Biases and Errors Overconfidence Bias Anchoring Bias Confirmation Bias Availability Bias. Representative Bias

Common Biases and Errors : 

Common Biases and Errors Escalation of Commitment Randomness Error Hindsight Bias

Toward Reducing Bias and Errors : 

Toward Reducing Bias and Errors Focus on goals. Look for information that disconfirms beliefs. Don’t try to create meaning out of random events.. Increase your options.

Ethics in Decision Making : 

Ethics in Decision Making Ethical Decision Criteria Utilitarianism Seeking the greatest good for the greatest number. Rights Respecting and protecting basic rights of individuals such as whistleblowers. Justice Imposing and enforcing rules fairly and impartially.

Ways to Improve Decision Making : 

Ways to Improve Decision Making Analyze the situation and adjust your decision making style to fit the situation. Be aware of biases and try to limit their impact. Combine rational analysis with intuition to increase decision-making effectiveness. Don’t assume that your specific decision style is appropriate to every situation. Enhance personal creativity by looking for novel solutions or seeing problems in new ways, and using analogies.

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Thank You