MGCR 222 Chapter Notes - Chapter 5: Confirmation Bias, Risk Aversion, Whistleblower

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18 Feb 2013
MGCR222 Chapter 5 Notes: Perception and Individual Decision Making
Perception a process by which individuals organize and interpret their sensory impressions in order to give meaning to
their environment. However, what we perceive can be substantially different from objective reality
Perceiver when you look at a target and attempt to interpret what you see, your interpretation is heavily
influenced by your personal characteristics. Characteristics that affect perception include your attitudes,
personality, motives, interests, past experiences, etc.
Target characteristics of the target we observe can affect what we perceive. The relationship of a target to its
background also influences perception, as does our tendency to group close things and similar things together.
Situation context is important. The time at which we see an object or event can influence our attention
Attribution Theory explains the ways in which we judge people differently, depending on the meaning we attribute to a
given behaviour. It suggests that when we observe an individual’s behaviour, we attempt to determine whether it was
internally or externally caused. The determination depends on distinctiveness, consensus, and consistency
Internally caused those we believe to be under the personal control of the individual
Externally caused what we imagine the situation forced the individual to do
Distinctiveness refers to whether an individual displays different behaviours in different situations. If behaviour
is unusual, we are likely to give it an external attribution. If it isn’t, we will judge it as external
Consensus if everyone who faces a similar situation responds in the same way. If consensus is high, external
attribution; if low, internal cause
Consistency the more consistent the behaviour, the more we are inclined to attribute it to internal causes
Errors or Biases
Fundamental attribution error when we make judgments about the behaviour of other people, we tend to
underestimate the influence of external factors and overestimate the influence of internal or personal factors
Self-serving bias individuals and organizations tend to attribute their own successes to internal factors such as
ability or effort, while putting the blame for failure on external factors such as bad luck or unproductive co-
Shortcuts to Judging Others
Selective perception allows us to “speed-read” others, but not without the risk of drawing an inaccurate picture.
Because we see what we want to see, we can draw unwarranted conclusions from an ambiguous situation
Halo effect when we draw a general impression about an individual on the basis of a single characteristic, such
as intelligence, sociability, or appearance
Contrast effect we don’t evaluate a person in isolation. Our reaction to a person is influenced by other persons
we have recently encountered
Stereotyping when we judge someone on the basis of our perception of the group to which he or she belongs
Decisions choices from among two or more alternatives
Problem a discrepancy exists between the current state of affairs and some desired state, requiring us to consider
alternative courses of action
Perception linkage all elements of problem identification and the decision making process are influenced by perception;
problems must be recognized and data must be selected and evaluated
Rational decision-making model - the “perfect world” model; assumes complete information, all options known, and
maximum payoff
Define the problem
Identify the decision criteria
Allocate weights to the criteria
Develop the alternatives
Evaluate the alternatives
Select the best alternative
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