Chapter 5

Perception and Individual Decision Making


I.                 Some basic concepts in perception


II.††††††† Kelley's attribution theory


††††††† Consensus

††††††† Consistency

††††††† Distinctiveness


III.††††††† Attribution biases


††††††† Fundamental attribution error

††††††† Actor-observer effect

††††††† Self-serving bias

††††††† Selective perception

††††††† Projection

††††††† Stereotyping

††††††† Halo effect

††††††† Self-fulfilling prophecy


IV.         Individual decision making


††††††† Decision making models

Heuristics and biases in judgment and decision making



I.                 Some basic concepts in perception


Perceiver, target, situation


       Disposition:a quality or trait that distinguishes one person or group from another.


       Attribution:an inference about the cause of a personís action.(perceived cause)


       Internal attribution:an inference that a personís behavior is caused by a personal disposition


      External attribution:an inference that a personís behavior is caused by an environmental or situational factor


II.††††††† Kelley's attribution theory


††††††† Consensus:the extent to which others react in the same

††††††† ††††††† manner to some stimulus or event as the person we ††††††† are considering


††††††† Consistency:the extent to which the person reacts to this ††††††† stimulus or event in the same way on other occasions


††††††† Distinctiveness:the extent to which the person reacts in ††††††† the same manner to other, different stimuli or events



How to make attributions?


Consensus††††††† Consistency††††††† Distinctiveness†† Attribution††††† †††††

High††††† ††††††† High††††††† High------->†† External


Low†††††† ††††††† High††††††† Low†† ------->†† Internal



III.††††††† Attribution biases


       Fundamental attribution error:the tendency to explain others' actions in terms of dispositional (internal) rather than situational (external) causes.


       Actor-observer effect:the tendency to attribute our own behavior to situational causes but that of others to internal ones.


       Self-serving bias:the tendency to take credit for positive behaviors but to blame negative ones on external causes.


       Selective perception:people selectively interpret what they see based on their interests, background, experience, and attitudes.


       Projection:attributing one's own characteristics to other people.


       Stereotyping:judging someone on the basis of one's perception of the group to which that person belongs


       Halo effect:drawing a general impression about an individual based on a single characteristic.


       Self-fulfilling prophecy:a two-phase process

(1) an individual defines a situation incorrectly;

(2) her subsequent actions (prompted by the definition) cause the originally incorrect conception to become reality


IV.††††††† Individual Decision Making


††††††† A.††††††† Decision making models


††††††† 1)††††††† The optimizing model


††††††† Assumptions: rationality

††††††† ††††††† People are rational, goal-oriented; they have clear ††††††† and constant preferences;all options are known, and final choice will maximize the outcome


††††††† 6 steps:††††††† Ascertain the need for a decision

††††††††††††††† ††††††† Identify the decision criteria

††††††††††††††† ††††††† Allocate weights to the criteria

††††††††††††††† ††††††† Develop the alternatives

††††††††††††††† ††††††† Evaluate the alternatives

††††††††††††††† ††††††† Select the best alternative



††††††† 2)††††††† The satisficing model

††††††† Assumption:bounded rationality

††††††† ††††††† People make decisions by constructing simplified ††††††† models that extract the essential features from problems ††††††† without capturing all their complexity.


B.Heuristics and biases in decision making

††††††† (Kahnman & Tversky, 1970s--)


1)††††††† Representativeness heuristic:the more similar an ††††††† ††††††† individual is to a typical members of a given group, †††† ††††††† the more likely he or she is to belong to that group.††† ††††††† Generally, it refers to the phenomenon that ††††††† probabilities are evaluated by the degree to which A ††††††† is the representative of B, i.e., by the degree to ††††††† ††††††† which A resembles B.


2)††††††† Availability:a judgmental heuristic in which people ††† ††††††† assess the frequency of a class or the probability of an ††††††† event by the ease with which instances or occurrences can ††††††† be brought to mind.


3)††††††† Anchoring:different starting points yield different ††††††† estimates, which are biased toward the initial value.††† ††††††† It occurs when (a) there is a reference point or (b) ††††††† estimate is based on the result of some incomplete †††† ††††††† computation.


4)        Framing:the way questions are framed influences decisions


5)       Nonrational escalation of commitment: refers to the tendency to bias decisions by oneís past actions, particularly after receiving negative feedback about such actions.



Understanding Behavior in Escalation Situations

Barry Staw and Jerry Ross


Escalation of commitment ††††††††† ††††††††† The sunk cost effect

Psychology of entrapment†† ††††††††† The too-much-invested-to-quit syndrome




Project determinants:

        whether a setback is judged to be due to a permanent or temporary problem

        whether further investment is likely to b efficacious

        how large a goal or payoff may result from continued investment

        future expenditures or costs necessary to achieve a projectís payoff

        the number of times previous commitments have failed to yield returns


Psychological determinants:

        framing effects

        self-justification biases

        confirmation trap


Social determinants:


        external binding (attribution bias)


Organizational determinants:

        institutional inertia


        organizational image or identity