Perception and Decision Making
Hui WANG
Guanghua School of Management
Peking University
Email: wanghui@gsm.pku.edu.cn
Tel: 62753645
9 Oct. 2002
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Issues for Today
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What is Perception, and Why is it Important?
Factors Influencing Perception
Person Perception: Making Judgments about
Others
The Link between Perception and Individual
Decision Making
How should Decisions be Made?
How are Decisions Actually Made in Organizations?
How to Improve Quality of Decision?
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Perception
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What is Perception?
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A process by which individuals organize
and interpret their sensory impressions in
order to give meaning to their environment.
Why is it Important?
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Because people’s behavior is based on
their perception of what reality is, not on
reality itself.
The world that is perceived is the world
that is behaviorally important.
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Factors Influencing Perception
Perceiver: The person trying to
interpret some observation that he or
she has just made.
Target: Whatever the perceiver is trying
to make sense of.
Situation: The context in which the
perception takes place.
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Factors in the Perceiver
•Schema
•Motives
•Interests
•Experience
•Expectations
Factors in the situation
•Time
•Work setting
•Social setting
Perception
Factors in the target
•Novelty
•Motion
•Sounds
•Size
•Background
•Proximity
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Characteristics of the Perceiver That
Affect Perception
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Schemas
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Schemas: Abstract knowledge
structures that are stored in memory
and make possible the organization and
interpretation of information about
targets of perception.
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Motivational State and Mood
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Motivational State: The needs,
values, and desires of a perceiver at the
time of perception.
Mood: How a perceiver feels at the
time of perception.
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Interpersonal Perception
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Emotion and Feeling
Behaviors
Personality
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Past Experience
Sibling
Impression Management
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First Impression
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Perceptual Judgment Experiment
by P.R.Wilson (1968)
Information
1.
2.
3.
4.
5.
A student
Demonstrator
Lecturer
Senior Lecturer
Professor Jones
Average Estimated
Height
5’ 9.9”
5’ 10.4”
5’ 10.9”
5’ 11.6”
6’ 0.3”
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Perception Biases and Problems
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Selective Perception
Halo Effect
Contrast Effects
Projection
Stereotyping
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Selective Perception
selectively interpret what see based on
own interests, background, experience,
and attitudes.
Dearborn & Simon (1958)
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Halo Effect
The perceiver’s general impression of a
target distorts his or her perception of
the target on specific dimensions.
Dion (1972)’s Experiment
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Contrast Effects
The perceiver’s perceptions of others
distort the perceiver’s perception of a
target.
 深陷的双眼证明内心的仇恨，突出的下巴
证明沿犯罪的道路走到底的决心；

深陷的双眼表明思想的深度，突出的下巴
表明在知识的道路上克服困难的意志力。
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Projection
attribute own characteristics to others.
Schiffenbauer (1974)
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Stereotyping
judge someone on the basis of the
perception of the group to which they
belong instead of their own
characteristics.
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Specific Applications in Organization
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Employee interview
Performance expectation
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Self-fulfilling prophecy or pygmalion effect:
When one person inaccurately perceives a second
person and the resulting expectations cause the
second person to have in ways consistent with the
original perception.
Employee evaluation
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Attribution Theory
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When individuals observe behavior, they
attempt to determine whether it is
internally or externally caused.
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Heider (1957)
Weiner (1974)
Kelley (1967)
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Types of Attributions
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Internal vs. External and Stable vs. unstable
Internal
External
Stable
Ability
Task Difficulty
Unstable
Effort
Luck
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Observation
Interpretation
Attribution
of Cause
High
External
Low
Internal
High
External
Low
Internal
High
External
High
Internal
Distinctiveness
Attribution
Theory and
Individual
Consensus
Behavior
Consistency
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Sources of Information
Internal attribution if
 low consensus,
 low distinctness,
 high consistency
External attribution if
 high consensus,
 high distinctness,
 high consistency
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Attributional Biases
Fundamental attribution error - the
tendency to over-attribute behavior to
internal rather than external causes.
Actor-observer effect - the tendency to
attribute the behavior of others to
internal causes and to attribute one’s
own behavior to external causes.
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Attributional Bias
Self-serving attribution - the tendency
to:
 perceive own success as internal and
failures as external.
 perceive others success as external, and
failure as internal
take credit for successes and avoid
blame for failures.
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Decision Making
The process by which members of an
organization choose a specific course of
action to respond to both problems and
opportunities.
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The Decision-Making Process
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Rational Model of Decision Making
Bounded Rationality
Implicit Favorite Model
Intuitive Model
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Rational Model of Decision Making
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A prescriptive approach based on the
assumptions that the decision maker
has all the necessary information and
will choose the best possible solution or
response.
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Rational Model of
Decision Making
TECH
Set Decision
Criteria
Problem
Identify and
Define Problem
Criteria
Weight
the Criteria
A1
A2
+
A1
A1
A2
A2
A3
Choice
A4
Make Optimal
Decision
An
Develop
Alternatives
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An
Evaluate
Alternatives
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Assumptions of the Rational
Model
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Problem clarity.
Known options.
Clear preferences.
Constant preferences.
No time or cost constraints.
People choose maximum payoff.
People have very high computational abilities
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Bounded Rationality
Bounded Rationality: People’s ability to
reason is constrained by the limitations of the
human mind itself. If a problem is too
complicated people simplify it and use
satisficing
Satisficing: Searching for and choosing the
first acceptable response or solution, not
necessarily the best possible one.
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Implicit Favorite Model
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Early in the decision process, decision
maker implicitly selects a preferred
alternative. Then the rest of the
decision process is essentially a decision
confirmation exercise, where the
decision makers makes sure his/her
implicit favorite is indeed the “right”
choice.
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Intuitive Model
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an unconscious process created out of
distilled experience.
intuition is often based on accumulated
experiences which allow one to
recognize patterns.
Main problem: since the criteria are not
open to examination, intuition is often
strongly influenced by perceptual biases.
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Intuitive Decision Making most
common under conditions of
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High uncertainty levels
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Little precedent
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Hard to predictable variables
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Limited facts
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Unclear sense of direction
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Analytical data is of little use
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Several plausible alternatives
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Time constraints
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Exercise(2): Decision Making
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Introduction
Individual Judgment
Group Judgment
Difference between You and Expert
Difference between Your Group and
Expert
Summary
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Sources of Error in Decision Making
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Perceptual Biases
Heuristics
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Availability
Representitiveness
Anchoring
Escalation of Commitment
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Heuristics:
Rules of thumb that simplify decision
making.
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Heuristics and the Biases They May Lead To
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Availability Heuristic
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The rule of thumb that says an event
that is easy to remember is likely to
have occurred more frequently than an
event that is difficult to remember.
Potential bias is overestimating the
frequency of vivid, extreme, or recent
events and causes.
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Availability Biases
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Vividness and Recency
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individuals judge events that are easier to
remember to be more numerous than
events that are difficult to remember
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Representativeness Heuristic
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The rule of thumb that says similar
kinds of events that happened in the
past are a good predictor of the
likelihood of an upcoming event.
Potential bias is failure to take into
account base rates and overestimating
the likelihood of rare events.
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Representativeness Biases
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Insensitivity to base rates
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individuals tend to ignore base rates in
assessing the likelihood of events when
other descriptive information is present,
even if that other information is irrelevant
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Anchoring and Adjustment Heuristic
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The rule of thumb that says that
decisions about how big or small an
amount should be/ can be made by
making adjustments from some initial
amount.
Potential bias is inappropriate decisions
when initial amounts are too high or too
low.
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Anchoring and Adjustment Biases
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Insufficient anchor adjustment
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individuals make estimates for values
based on some initial value, even when the
initial value is irrelevant
Overconfidence
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individuals tend to be overconfident of the
infallibility of their judgements when
answering difficult questions
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One Additional Biases
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Hindsight Bias
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after finding out the correct outcome of an
event, individuals tend to overestimate the
extent to which they would have predicted
that outcome
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Escalation of Commitment
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Increased commitment to a previous
decision in spite of negative information
The tendency to invest additional time,
money, or effort into what are
essentially bad decisions or
unproductive courses of action.
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The Three Components of Creativity
Expertise
Creativity
Task
Motivation
Creativity
Skills
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Decision-Making Styles
Tolerance for Ambiguity
High
Analytic
Conceptual
Directive
Behavioral
Low
Rational
Way of Thinking
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Intuitive
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Summary and Implications for Managers
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Perception
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Individuals behave based not on the way their
external environment actually is but, rather, on what
they see or believe it to be.
What individuals perceive from their work situation
will influence their productivity more than will the
situation itself.
Absenteeism, turnover, and job satisfaction are also
reactions to the individual’s perceptions.
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Summary and Implications for Managers
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Individual Decision Making
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Individuals think and reason before they act.
Under some decision situations, people follow the rational
decision-making model.
What can managers do to improve their decision making?
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Analyze the situation.
Be aware of biases.
Combine rational analysis with intuition.
Don’t assume that your specific decision style is appropriate for
every job.
Use creativity-stimulation techniques.
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