Question: Although intuition certainly plays a role in decision-making, can a test actually tell us whether we are prejudiced? Is the number of milli-seconds it takes to select an associa

Question:

Although intuition certainly plays a role in decision-making, can a test actually tell us whether we are prejudiced? Is the number of milli-seconds it takes to select an association between two concepts enough to tell someone that he/she is biased? What are your thoughts as it pertains to these questions? Please explain.

robbinsjudge_ob18_inppt_06.pptx

Organizational Behavior

Eighteenth Edition

Chapter 6

Perception and Individual Decision Making

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Welcome to this Organizational Behavior course that uses the 18th edition of the textbook, Organizational Behavior by Robbins and Judge. This is considered among the most widely used OB textbooks in the world. Robbins and Judge are recognized as definitive aggregators of OB concepts, applications, and practices. The course and this book will provide you with a resource that will benefit you throughout your degree program and your professional life.

Learning Objectives

6.1 Explain the factors that influence perception.

6.2 Describe attribution theory.

6.3 Explain the link between perception and decision making.

6.4 Contrast the rational model of decision making with bounded rationality and intuition.

6.5 Explain how individual differences and organizational constraints affect decision making.

6.6 Contrast the three ethical decision criteria.

6.7 Describe the three-stage model of creativity.

After studying this chapter, you should be able to:

Explain the factors that influence perception.

Describe attribution theory.

Explain the link between perception and decision making.

Contrast the rational model of decision making with bounded rationality and intuition.

Explain how individual differences and organizational constraints affect decision making.

Contrast the three ethical decision criteria.

Describe the three-stage model of creativity.

Explain the Factors That Influence Perception (1 of 2)

Perception is a process by which individuals organize and interpret their sensory impressions to give meaning to their environment.

It is important to the study of OB because people’s behaviors are based on their perception of what reality is, not on reality itself.

Perception is a process by which individuals organize and interpret their sensory impressions to give meaning to their environment. It is important to the study of OB because people’s behaviors are based on their perception of what reality is, not on reality itself.

Explain the Factors That Influence Perception (2 of 2)

Exhibit 6-1 Factors That Influence Perception

Many factors shape and sometimes distort perception. These factors can reside in the perceiver, the object or target being perceived, or the situation in which the perception is made (see Exhibit 6-1).

Explain Attribution Theory (1 of 10)

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

Attribution theory suggests that when we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused. That determination depends largely on three factors: distinctiveness, consensus, and consistency. We’ll talk more about each of these in a minute.

Explain Attribution Theory (2 of 10)

Clarification of the differences between internal and external causation

Internally caused – those that are believed to be under the personal control of the individual.

Externally caused – resulting from outside causes.

First, let’s clarify the differences between internal and external causation. Internally caused behaviors are those who are believed to be under the personal control of the individual. Externally caused behavior is seen as resulting from outside causes; that is, the person is seen as having been forced into the behavior by the situation.

Explain Attribution Theory (3 of 10)

Exhibit 6-2 Attribution Theory

Now, let’s look at each of the three determining factors shown here in Exhibit 6-2, more closely. Distinctiveness refers to whether an individual displays different behaviors in different situations. Consensus occurs if everyone who is faced with a similar situation responds in the same way. Finally, is there consistency in a person’s actions.

Explain Attribution Theory (4 of 10)

Fundamental attribution error

We have a tendency to underestimate the influence of external factors and overestimate the influence of internal or personal factors.

Self-serving bias

Individuals attribute their own successes to internal factors.

Errors or biases can distort attributions. Fundamental attribution error occurs when we underestimate the influence of external factors and overestimate the influence of internal or personal factors. Self-serving bias occurs when individuals attribute their own successes to internal factors, such as ability or effort, while putting the blame for failure on external factors, such as luck.

Explain Attribution Theory (5 of 10)

Common Shortcuts in Judging Others

Selective perception

Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived.

Since we can’t observe everything going on around us, we engage in selective perception.

We use a number of shortcuts when we judge others, but it’s important to recognize that while these shortcuts can be helpful, they can also result in significant distortions.

Let’s begin with selective perception. Any characteristic that makes a person, object, or event stand out will increase the probability that it will be perceived. Since we can’t observe everything going on around us, we engage in selective perception.

Explain Attribution Theory (6 of 10)

Halo effect

The halo effect occurs when we draw a general impression based on a single characteristic.

Contrast effects

We do not evaluate a person in isolation.

Our reaction to one person is influenced by other persons we have recently encountered.

Another shortcut is the halo effect, which occurs when we draw a general impression on the basis of a single characteristic.

A third shortcut involves contrast effects. We do not evaluate a person in isolation. Our reaction to one person is influenced by other individuals we have recently encountered. For example, an interview situation in which one sees a pool of job applicants can distort perception. Distortions of any given candidate’s evaluation can occur as a result of his or her place in the interview schedule.

Explain Attribution Theory (7 of 10)

Stereotyping

Judging someone based on one’s perception of the group to which that person belongs.

We have to monitor ourselves to make sure we’re not unfairly applying a stereotype in our evaluations and decisions.

A fourth shortcut is stereotyping, wherein we judge someone based on our perception of the group to which that person belongs. Generalization is not without advantages – it is a means of simplifying a complex world, and it permits us to maintain consistency. The problem, of course, is when we inaccurately stereotype. We have to monitor ourselves to make sure we’re not unfairly applying a stereotype in our evaluations and decisions.

Explain Attribution Theory (8 of 10)

Applications of Shortcuts in Organizations

Employment Interview

Evidence indicates that interviewers make perceptual judgments that are often inaccurate.

Interviewers generally draw early impressions that become very quickly entrenched.

Studies indicate that most interviewers’ decisions change very little after the first four or five minutes of the interview.

Let’s look at some specific applications of shortcuts in organizations.

The first application is the employment interview. Evidence indicates that interviewers make perceptual judgments that are often inaccurate. Moreover, early impressions can become quickly entrenched. In fact, research shows that most interviewers’ decisions change very little after the first few minutes of an interview.

Explain Attribution Theory (9 of 10)

Performance Expectations

Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty.

Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that people’s expectations determine their behavior.

Expectations become reality.

The second application of shortcuts involves performance expectations. Evidence demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty. Self-fulfilling prophecy, or the Pygmalion effect, characterizes the fact that people’s expectations determine their behavior. Expectations become reality.

Explain Attribution Theory (10 of 10)

Performance Evaluation

An employee’s performance appraisal is very much dependent upon the perceptual process.

Many jobs are evaluated in subjective terms.

Subjective measures are problematic because of selective perception, contrast effects, halo effects, and so on.

The third application of shortcuts involves performance evaluation. An employee’s performance appraisal is very much dependent upon the perceptual process. Although the appraisal can be objective, many jobs are evaluated in subjective terms. Subjective measures can be problematic because of selective perception, contrast effects, halo effects, and so on.

Explain the Link Between Perception and Decision Making

Individuals make decisions – choosing from two or more alternatives.

Decision making occurs as a reaction to a problem.

There is a discrepancy between some current state of affairs and some desired state, requiring consideration of alternative courses of action.

One person’s problem is another’s satisfactory state of affairs.

Individuals in organizations constantly make decisions. They make choices from among two or more options many times during the day, and at different levels of importance or intensity.

Usually, decision making occurs as a reaction to a problem: there is a discrepancy between some current state of affairs and some desired state, requiring consideration of alternative courses of action. One person’s problem is another’s satisfactory state of affairs.

Every decision requires interpretation and evaluation of information. Data are typically received from multiple sources. The perceptions of the decision maker will decide which data are relevant to the decision and which are not. Alternatives will be developed, and the strengths and weaknesses of each need to be evaluated.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (1 of 12)

Exhibit 6-3 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.

We often think the best decision maker is rational and makes consistent, value-maximizing choices within specified constraints. This Rational Decision-Making process follows six steps, as shown here in Exhibit 6-3.

Step 1: Define the problem.

Step 2: Identify the decision criteria.

Step 3: Allocate weights to the criteria.

Step 4: Develop the alternatives.

Step 5: Evaluate the alternatives.

Step 6: Select the best alternative.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (2 of 12)

Assumptions of the Rational Model

The decision maker…

Has complete information.

Is able to identify all the relevant options in an unbiased manner.

Chooses the option with the highest utility.

Most decisions in the real world don’t follow the rational model.

The rational decision-making model assumes the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility.

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.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (3 of 12)

Bounded Rationality

Most people respond to a complex problem by reducing it to a level at which it can be readily understood.

People satisfice – they seek solutions that are satisfactory and sufficient.

Individuals operate within the confines of bounded rationality.

They construct simplified models that extract the essential features.

When faced with a complex problem, most people respond by reducing the problem to a level at which it can be readily understood. This is because the limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize. Instead, people satisfice; that is, they seek solutions that are satisfactory and sufficient. Individuals operate within the confines of bounded rationality and construct simplified models that extract the essential features.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (4 of 12)

How does bounded rationality work?

Once a problem is identified, the search for criteria and options begins.

A limited list of the more conspicuous choices is identified.

The decision maker then reviews the list, looking for a solution that is “good enough.”

How does bounded rationality work? Once a problem is identified, the search for criteria and options begins. The decision maker will identify a limited list made up of the more conspicuous choices, which are easy to find, tend to be highly visible, and represent familiar criteria and previously tried-and-true solutions. Once this limited set of options is identified, the decision maker will begin reviewing it.

The decision maker will begin with options that differ only in a relatively small degree from the choice currently in effect. The first option that meets the “good enough” criterion ends the search. (Satisficing is not always a bad idea. It is a simple process that may frequently be more sensible than the traditional rational decision-making model.)

To use the rational model in the real world, you need to gather a great deal of information about all the options, compute applicable weights, and then calculate values across a huge number of criteria. All these processes can cost time, energy, and money. If there are many unknown weights and preferences, the fully rational model may not be any more accurate than a best guess. Sometimes a fast-and-frugal process of solving problems is the best option.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (5 of 12)

Intuition

Intuitive decision making occurs outside conscious thought; it relies on holistic associations, or links between disparate pieces of information, is fast, and is affectively charged, meaning it usually engages the emotions.

The key is neither to abandon nor rely solely on intuition, but to supplement it with evidence and good judgment.

Another important decision-making technique is intuition. Perhaps the least rational way of making decisions, intuitive decision making is an unconscious process created from distilled experience. It occurs outside conscious thought, relies on holistic associations, or links between disparate pieces of information, is fast, and is affectively charged, meaning it usually engages the emotions. While intuition isn’t rational, it isn’t necessarily wrong. Nor does it always contradict rational analysis; rather, the two can complement each other. The key is neither to abandon nor rely solely on intuition, but to supplement it with evidence and good judgment.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (6 of 12)

Exhibit 6-4 Reducing Biases and Errors

Focus on Goals. Without goals, you can’t be rational, you don’t know what information you need, you don’t know which information is relevant and which is irrelevant, you’ll find it difficult to choose between alternatives, and you’re far more likely to experience regret over the choices you make. Clear goals make decision making easier and help you eliminate options that are inconsistent with your interests.

Decision makers allow systematic biases and errors to creep into their judgments. People tend to rely on experience, impulses, gut feelings, and rules of thumb, which can all lead to distortions. Exhibit 6-4 suggests some techniques to avoid decision biases or errors beginning with focusing on goals.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (7 of 12)

[Exhibit 6-4 Continued]

Look for Information That Disconfirms Your Beliefs. One of the most effective means for counteracting overconfidence and the confirmation and hindsight biases is to actively look for information that contradicts your beliefs and assumptions. When we overtly consider various ways we could be wrong, we challenge our tendencies to think we’re smarter than we actually are.

Don’t Try to Create Meaning out of Random Events. The educated mind has been trained to look for cause-and-effect relationships. When something happens, we ask why. And when we can’t find reasons, we often invent them. You have to accept that there are events in life that are outside your control. Ask yourself if patterns can be meaningfully explained or whether they are merely coincidence. Don’t attempt to create meaning out of coincidence.

Additional techniques to avoid decision biases or errors include looking for information that disconfirms your beliefs and avoiding trying to create meaning out of random events.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (8 of 12)

[Exhibit 6-4 Continued]

Increase Your Options. No matter how many options you’ve identified, your final choice can be no better than the best of the option set you’ve selected. This argues for increasing your decision alternatives and for using creativity in developing a wide range of diverse choices. The more alternatives you can generate, and the more diverse those alternatives, the greater your chance of finding an outstanding one.

Source: Based on S. P. Robbins, Decide & Conquer: Making Winning Decisions and Taking Control of Your Life (Upper Saddle River, NJ: Financial Times/Prentice Hall, 2004), 164–68.

One more technique to avoid decision biases or errors is to increase your options.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (9 of 12)

Common Biases and Errors in Decision Making

Overconfidence Bias: individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability.

Anchoring Bias: fixating on initial information as a starting point and failing to adequately adjust for subsequent information.

Decision makers engage in bounded rationality, but they also allow systematic biases and errors to creep into their judgments.

The first is overconfidence bias. Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability. The tendency to be too confident about their ideas might keep some from planning how to avoid problems that arise. 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.

A second bias is anchoring bias. This involves 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 anchoring.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (10 of 12)

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.

A third bias is confirmation bias. It is a type of selective perception. Here we seek out information that reaffirms past choices, and discount information that contradicts past judgments.

Fourth is availability bias, or the tendency for people to base judgments on information that is readily available.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (11 of 12)

Escalation of Commitment: staying with a decision even when there is clear evidence that it’s wrong.

Likely to occur when individuals view themselves as responsible for the outcome.

Randomness Error: our tendency to believe we can predict the outcome of random events.

Decision making becomes impaired when we try to create meaning out of random events.

Escalation of commitment is a bias that occurs when we stay with a decision even when there is clear evidence that it’s wrong. This type of bias is most likely to occur when individuals view themselves as responsible for the outcome.

Another bias is randomness error, which is rooted in our tendency to believe we can predict the outcome of random events. Decision making becomes impaired when we try to create meaning out of random events.

Rational Model of Decision Making vs. Bounded Rationality and Intuition (12 of 12)

Risk Aversion: the tendency to prefer a sure thing instead of a risky outcome.

Ambitious people with power that can be taken away appear to be especially risk averse.

People will more likely engage in risk-seeking behavior for negative outcomes, and risk-averse behavior for positive outcomes, when under stress.

Hindsight Bias: the tendency to believe falsely that one has accurately predicted the outcome of an event, after that outcome is actually known.

Another bias, risk aversion, is the tendency to prefer a sure thing instead of a risky outcome. Overall, the framing of a decision has an effect on whether or not people will engage in risk aversive behavior—when decisions are framed positively, such as a potential gain of $50, people will be more risk averse (conversely, when the decision is framed in a negative manner, such as a loss of $50, people will engage in riskier behaviors). Generally speaking, people will more likely engage in risk-seeking behavior for negative outcomes, and risk-averse behavior for positive outcomes, when under stress.

Finally, hindsight bias is the tendency to believe falsely that one has accurately predicted the outcome of an ev

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