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OB Chapter 5
N/A
10
Business
Undergraduate 1
11/08/2013

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Term
LG1- Define perception and explain the factors that influence it.
Definition
Perception
- Is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment
- Factors influencing perception
o Perceiver
o Target
o Situation
Term
LG2- Explain attribution theory and list the three determinants of attribution
Definition
Attribution theory: An attempt to determine whether a individual's behavior is internally(by the person) or externally(caused by the situation) caused.
Determinant factors: Distinctiveness, Consensus, consistency.
Fundamental attribution error: The tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments about the behavior of others
o Self-serving bias: The tendency for individuals to attribute their own successes to internal factors and put the blame for failures on external factors
Term
LG3- Identify the shortcuts individuals use in making judgements about others.
Definition
- Selective perception: the tendency to selectively interpret what one sees on the basis of one’s interests, background, experience and attitudes
- Halo effect: the tendency to draw a general impression about an individual on the basis of a single characteristic
- Contract effect: evaluation of a person’s characteristics that is affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics
- Stereotyping: judging someone on the basis of one’s perception of the group to which that person belongs
o Profiling: a form of stereotyping in which a group of individuals is singled out- typically on the basis of race or ethnicity- for intensive inquiry, scrutiny, or investigation
Term
LG3- Identify the specific applications of shortcuts in organizations
Definition
Specific applications of shortcuts in organizations
- Employment interview
- Performance expectations
o Self-fulfilling prophecy: a situation in which a person inaccurately perceives a second person, and the resulting expectations cause the second person to behave in ways consistent with the original perception
o Pygmalion effect
- Performance evaluation
Term
LG4- Explain the link between perception and decision making.
Definition
The link between perception and individual decision making
- Decision: choices made from among two or more alternatives
- Problem: a discrepancy between the current state of affairs and some desired state
- One person’s problem is another person’s satisfactory state of affairs
- In order to decide, we need to interpret and evaluate the information we perceived, every individual evaluates and perceives differently
Term
LG5- Apply the rational model of decision making and contrast it with bounded rationality and intuition.
Definition
Decision making in organizations
- The rational model, bounded rationality and intuition
o Rational decision making
Rational: characterized by making consistent, value-maximizing choices within specified constraints
Rational decision making model: a decision-making model that describes how individuals should behave in order to maximize some outcome
1. Define the problem
2. Identify the decision criteria
3. Allocate weights to the criteria
4. Develop the alternatives
5. Evaluate the alternatives
6. Select the best alternative
Bounded rationality
A process of making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity
Intuition
Intuitive decision making: an unconscious process created out of distilled experience
Intuition is not rational
Term
LG6- List and explain the common decision biases or errors.
Definition
Common biases and errors in decision making
- Overconfidence bias: weakest knowledgeable people display more confidence
- Anchoring bias: a tendency to fixate on initial information from which one then fails to adequately adjust for subsequent information
- Confirmation bias: the tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgments
- Availability bias: the tendency for people to base their judgments on information that is readily available to them
- Escalation of commitment: an increased commitment to a previous decision in spite of negative information (e.g., buying stocks even when the price goes down), to demonstrate that the initial decision was not wrong and to avoid having to admit that they did a mistake
- Randomness error: the tendency of individuals to believe that they can predict the outcome of random events
- Winner’s curse: a decision making dictum which argues that the winning participant is in auction typically pay too much for the item. therefore, unless the bidders dramatically under-evaluate there is a good chance that the winner will pay too much
- Hindsight bias: the tendency to believe falsely after an outcome of an event is actually known, that one would have accurately predicted that outcome
Term
LG7- Explain how individual differences and organizational constraints affect decision making.
Definition
Influences on decision making: individual differences and organizational constraints
- Individual differences
o Personality: influences decision making
o Gender: rumination refers to reflecting at length. In terms of dec.mak., it means over-thinking problems. Women are more likely to engage in rumination
- Org. constraints
o Performance evaluation
o Reward system
o Formal regulations
o System-imposed time constraints
o Historical precedents
Term
LG8- Contrast the three ethical decision criteria
Definition
What about ethics in decision making?
- Three ethical decision criteria
o Utilitarianism: a system in which decisions are made to provide the greatest good for the greatest number- decisions are made solely on the basis of their outcomes or consequences
o Rights: dec.mak. consistent with fundamental liberties
o Justice: impose and enforce rules fairly and impartially so that there is an equitable distribution of benefits and costs
Term
LG9- Define creativity and discuss the three component model of creativity.
Definition
- Improving creativity in decision making
o Creativity: the ability to produce novel and useful ideas
o Creative potential
o Three-component model of creativity: the proposition that individual creativity requires expertise, creative thinking skills, and intrinsic task motivation
 Expertise
 Creative-thinking skills
 Intrinsic Task motivation
Global implication
- Attributions
- Decision making
- Ethics
Individual dec.mak.
- First, analyze the situation
- Second, be aware of biases
- Third, combine rational analysis with intuition
- Finally, try to enhance your creativity
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