Organizational Behavior
decision-making
Tomáš Ondráček
ondracek.t@mail.muni.cz
Faculty of Economics and Administration, Masaryk University
2024
PERCEPTION AND DECISION-MAKING
perception and decision-making
·ORBE ·2024 2 / 55
PERCEPTION AND DECISION-MAKING
The link between perception and decision-making
decision
A decision is the result of a selection process (decision making)
of two or more alternatives.
·ORBE ·2024 3 / 55
PERCEPTION AND DECISION-MAKING problems
problems
·ORBE ·2024 4 / 55
PERCEPTION AND DECISION-MAKING problems
problems
selective perception
Selective perception is the tendency to interpret sensations from the
environment based on one’s own interests, experiences, attitudes, etc.
Business Example:
In job interviews, hiring managers often favor candidates from
prestigious universities, believing they are more competent,
regardless of other qualifications. This bias can lead to overlooking
other qualified candidates (Ruggieri, 2013).
·ORBE ·2024 5 / 55
PERCEPTION AND DECISION-MAKING problems
problems
fundamental attribution error
Fundamental attribution error is the tendency to make judgements
about behaviour of others to underestimate the influence of external
factors and overestimate the influence of internal factors.
Business Example:
In performance reviews, managers might attribute an employee’s
failure to meet deadlines to laziness or lack of commitment without
considering external factors, such as unrealistic timelines
(Ross, 1977).
·ORBE ·2024 6 / 55
PERCEPTION AND DECISION-MAKING problems
problems
self-serving bias
Self-serving bias is the tendency of persons to attribute their own
achievements to internal factors.
Business Example:
A salesperson might attribute a successful quarter to their own hard
work but blame a poor quarter on unfavorable market conditions,
even if both situations had similar challenges (Miller & Ross, 1975).
·ORBE ·2024 7 / 55
PERCEPTION AND DECISION-MAKING problems
problems
halo effect
The halo effect is the tendency to form a general opinion of a person
based on one dominant characteristic.
Business Example:
In corporate settings, a CEO who excels in public speaking may be
perceived as competent in strategy and operations, even if they lack
expertise in these areas (Thorndike, 1920).
·ORBE ·2024 8 / 55
PERCEPTION AND DECISION-MAKING problems
problems
contrast effect
The contrast effect is an individual’s tendency to evaluate persons or
objects on based on recent or simultaneous experiences with other
persons or objects.
Business Example:
In employee evaluations, when a strong employee is reviewed before
a mediocre one, the latter might be rated lower than they would have
been if evaluated independently (Wilson & Ross, 2006).
·ORBE ·2024 9 / 55
PERCEPTION AND DECISION-MAKING problems
problems
stereotyping
Stereotyping is the evaluation of a person based on one’s own
perception of the group to which the person belongs.
Business Example:
A company might assume that younger employees are more
tech-savvy and give them IT-related projects, while overlooking older
employees who might have stronger expertise in the same area
(Greenhaus & Parasuraman, 2006).
·ORBE ·2024 10 / 55
PERCEPTION AND DECISION-MAKING problems
problems
self-fulfilling prophecy
A self-fulfilling prophecy is a situation in which the expectation of
some behavior or outcome affects the situation in such a way that the
expected behavior or outcome that would not otherwise occur occurs.
·ORBE ·2024 11 / 55
PERCEPTION AND DECISION-MAKING problems
problems: examples
job interview
performance expectations
performance evaluation
·ORBE ·2024 12 / 55
RATIONALITY AND DECISION-MAKING
rationality and decision-making
·ORBE ·2024 13 / 55
RATIONALITY AND DECISION-MAKING
assumptions of the rational model
omniscience
all information
omnipotence
logical and rational
perfection
choosing the best option
·ORBE ·2024 14 / 55
RATIONALITY AND DECISION-MAKING
intuition
intuition
Intuition refers to a belief that a person has acquired without being
able to reproduce the process of that acquisition or to provide
reasons for that belief.
·ORBE ·2024 15 / 55
RATIONALITY AND DECISION-MAKING
intuition
intuitive decision-making
Intuitive decision-making refers to the process of making decisions
based on beliefs acquired without knowledge of their justification.
Business Example:
Steve Jobs is known for relying heavily on intuition when making
decisions about new products, such as the iPhone, without relying on
traditional market research data (Isaacson, 2011).
·ORBE ·2024 16 / 55
RATIONALITY AND DECISION-MAKING
bounded rationality
bounded rationality
Bounded rationality is a model of decision making using the
construct of simplified representations that select the important ones
from given situations parts without capturing their full complexity. It
is associated with the search for a solution that may not be the best,
but fulfils the chosen criteria (satisfactory, costly, etc.).
Business Example:
Google often uses bounded rationality in product development,
choosing "satisfactory" solutions rather than optimal ones due to the
complexity of user preferences (Simon, 1990).
·ORBE ·2024 17 / 55
RATIONALITY AND DECISION-MAKING
ecological rationality
congruence between environment and reasoning (mind)
realism (instead of optimism or pessimism)
no preconceived assumptions
no evolutionary arguments
possibility to compare decisions
·ORBE ·2024 18 / 55
RATIONALITY AND DECISION-MAKING
ecological rationality
(Rich, 2017)
ecological rationality
A process P in a context C is ecologically rational to the extent that P
is fast, productive, and accurate in C.
·ORBE ·2024 19 / 55
RATIONALITY AND DECISION-MAKING
heuristics
(Gigerenzer, Hertwig, & Pachur, 2011)
[Heuristics] are normative in the same sense that optimization
methods such as multiple regression and Bayes’ rule can
be normative–in one class of environments, but not in all.
·ORBE ·2024 20 / 55
RATIONALITY AND DECISION-MAKING
speed, productivity and accuracy
(Simon, 1956)
We see that an organism can satisfy a number of distinct
needs without requiring a very elaborate mechanism for
choosing among them. In particular, we do not have to postulate
a utility function or a ‘marginal rate of substitution.’
·ORBE ·2024 21 / 55
RATIONALITY AND DECISION-MAKING
coherence not consistency
(Arkes, Gigerenzer, & Hertwig, 2016)
Coherence concerns purely syntactical relations between behaviors.
Correspondence, in contrast, ... [uses] measures
such as how healthy, rich, successful in school, happy in marriage,
or accurate in judgments people are...
·ORBE ·2024 22 / 55
RATIONALITY AND DECISION-MAKING problem solving process
problem solving process
·ORBE ·2024 23 / 55
RATIONALITY AND DECISION-MAKING problem solving process
problem solving process: recommendations
focus on the goal, the point, the essential elements
search for conflicting, disagreeing information or opinions
admitting random phenomena
expanding the number of possibilities
·ORBE ·2024 24 / 55
RATIONALITY AND DECISION-MAKING problem solving process
problem solving process: solution model I/II
1. problem definition
2. identification of decision criteria
3. allocation of weight to each step of the criterion
4. development of alternatives
5. evaluation of alternatives
6. selection of the best alternative
·ORBE ·2024 25 / 55
RATIONALITY AND DECISION-MAKING problem solving process
problem solving process: solution model II/II
2
analysis
problem
5
evaluation
solutions
1
identification
problem
3
design
of the solution
?
4
implementation
solution
·ORBE ·2024 26 / 55
RATIONALITY AND DECISION-MAKING influences on decision making
influences on decision making
·ORBE ·2024 27 / 55
RATIONALITY AND DECISION-MAKING influences on decision making
individual differences
personality
conscientiousness
self-esteem
gender
rumination
mental abilities
cultural differences
nudging
·ORBE ·2024 28 / 55
RATIONALITY AND DECISION-MAKING influences on decision making
organisational constraints
performance appraisal systems
reward systems
formal regulation
time constraints
historical precedents
·ORBE ·2024 29 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
·ORBE ·2024 30 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
risk aversion
Risk aversion refers to the tendency to prefer a certain, albeit smaller,
gain, as opposed to a more risky solution, which can be expected to
yield a higher profit.
Business Example:
Kodak hesitated to invest in digital photography, fearing that it would
cannibalize its profitable film business. This risk aversion ultimately
led to the company’s downfall (Christensen, 1997).
·ORBE ·2024 31 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
availability bias
The availability fallacy refers to the tendency to base decisions on
information that is readily or quickly available.
·ORBE ·2024 32 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
anchoring bias
The anchoring effect refers to the tendency to rely on anchoring bias
in decision making. One (often primary) piece of information and
attribute less importance to others (subsequent) information.
·ORBE ·2024 33 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
confirmation bias
Confirmation bias refers to the tendency to seek information that
confirm a previous decision or opinion and to reject information that
that contradicts that decision or opinion.
·ORBE ·2024 34 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
escalation of commitment
Escalation of commitment refers to the tendency to increase
commitment to a previous decision despite new negative information
or knowledge.
Business Example:
The Concorde supersonic airplane project continued to receive
funding despite increasing costs and declining viability, due to prior
commitments by the British and French governments (Staw, 1976).
·ORBE ·2024 35 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
randomness error
Randomness error refers to an individual’s tendency to believe that it
is possible to to predict the outcome of random events.
·ORBE ·2024 36 / 55
RATIONALITY AND DECISION-MAKING problems of decision-making
problems of decision-making
randomness error
The fallacy of hindsight refers to the tendency of an individual to
have randomness after the occurrence of an event to believe that the
event could have been correct in the past predicted.
·ORBE ·2024 37 / 55
RATIONALITY AND DECISION-MAKING ethical decision-making
ethical decision-making
·ORBE ·2024 38 / 55
RATIONALITY AND DECISION-MAKING ethical decision-making
ethical decision-making: approaches
utilitarianism
Utilitarianism refers to an approach to moral decision making that is
focuses on the outcomes of the actions being evaluated. The criterion
for ethical decisions can be, for example, the degree of good that the
act will bring and the number of the number of people to whom that
good will be caused.
deontology
Deontology refers to an approach to moral decision making that is
focuses on the rights or duties of persons that are associated with
actions, that are the subject of the decision.
·ORBE ·2024 39 / 55
RATIONALITY AND DECISION-MAKING ethical decision-making
ethical decision-making: justice
distributive justice
Distributive justice refers to the perceived adequacy, fairness with
respect to the goods being redistributed.
procedural justice
Procedural justice refers to perceived adequacy, fairness of the
process, the procedure that is used in the redistribution of goods.
·ORBE ·2024 40 / 55
RATIONALITY AND DECISION-MAKING ethical decision-making
Jones’ Synthesis of Ethical Decision-Making Models
(Jones, 1991)
·ORBE ·2024 41 / 55
RATIONALITY AND DECISION-MAKING ethical decision-making
An Issue-Contingent Model
of Ethical Decision Making in Organizations
(Jones, 1991)
·ORBE ·2024 42 / 55
RATIONALITY AND DECISION-MAKING ethical decision-making
ethical decision-making: ethics, economics and
organisation
behavioural ethics
lying
cheating
whistleblowing
...
·ORBE ·2024 43 / 55
CREATIVITY
creativity
·ORBE ·2024 44 / 55
CREATIVITY
creativity: definition
creativity
Creativity refers to the ability to come up with new (and useful) ideas.
·ORBE ·2024 45 / 55
CREATIVITY
creativity: convergent and divergent thinking
convergent thinking
Convergent thinking is aimed at presenting the single best or correct
or adequate answer to a well-defined problem. It is characterized by
speed, accuracy, logical construction, etc.
divergent thinking
Divergent thinking is aimed at presenting multiple possible answers
within a given situation. It is characterized by multiplicity, flexibility,
originality, creativity, etc.
(Cropley, 2006; Guilford, 1950, 1967)
·ORBE ·2024 46 / 55
CREATIVITY
creativity: vertical and lateral thinking
vertical thinking
Vertical thinking focuses on correctness.
lateral thinking
Lateral thinking is focused on quantity.
(De Bono, 1970)
·ORBE ·2024 47 / 55
CREATIVITY
creativity: Nine Dot Problem
(Art of Play, 2016)
·ORBE ·2024 48 / 55
CREATIVITY
creativity: HOTS
Higher Order Thinking Skills (HOTS)
A model of thinking that includes three domains: knowledge base,
critical thinking and creative thinking.
·ORBE ·2024 49 / 55
CREATIVITY
creativity: HOTS
(McNulty, 2016)
·ORBE ·2024 50 / 55
CREATIVITY
creativity: model
causes of creative behavior
creative behavior
creative outcomes (inovation)
creative potential creative environment
problem formulation → information gathering → idea generation → idea evaluation
novelty usefulness
(Robbins & Judge, 2017)
·ORBE ·2024 51 / 55
CONCLUSION
CONCLUSION
·ORBE ·2024 52 / 55
CONCLUSION
cognitive failures
(Kitcher, 1992)
Cognitively inferior performances can be based on laziness,
methodological ignorance or misinformation, failure to perceive
relevant similarities, lack of imagination, and numerous
other kinds of factors
·ORBE ·2024 53 / 55
zdroje I
Arkes, H. R., Gigerenzer, G., & Hertwig, R. (2016). How bad is incoherence? Decision, 3(1), 20.
Art of Play. (2016, August). History of the Nine Dot Problem. Author. Retrieved from
https://www.artofplay.com/blogs/articles/history-of-the-nine-dot-problem
Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Harvard
Business Review.
Cropley, A. (2006). In praise of convergent thinking. Creativity research journal, 18(3), 391–404.
De Bono, E. (1970). Lateral thinking. Penguin London, UK.
Gigerenzer, G. E., Hertwig, R. E., & Pachur, T. E. (2011). Heuristics: The foundations of adaptive behavior. Oxford
University Press.
Greenhaus, J. H., & Parasuraman, S. (2006). Stereotypes in the workplace: A case study. Human Resource
Management, 45(3), 209-222.
Guilford, J. P. (1950). Creativity. American Psychologist, 5(9), 444–454.
Guilford, J. P. (1967). Creativity: Yesterday, today and tomorrow. The Journal of Creative Behavior, 1(1), 3–14.
Isaacson, W. (2011). Steve jobs. Simon and Schuster.
Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issue-contingent model.
Academy of management review, 16(2), 366–395.
Kitcher, P. (1992). The naturalists return. The Philosophical Review, 101(1), 53–114.
McNulty, N. (2016, July). Are South African schools ready for the 4th Industrial Revolution? Retrieved from
https://www.niallmcnulty.com/tag/21st-century-skills/
Miller, D. T., & Ross, M. (1975). Self-serving biases in the attribution of causality: Fact or fiction? Psychological
Bulletin, 82(2), 213-225.
Rich, P. (2017). Better Lessons from Ecological Rationality. SES 2017.
Robbins, S. P., & Judge, T. A. (2017). Organizational Behavior. Pearson Education Limited.
Ross, L. D. (1977). The "fundamental attribution error": A look at some underlying concepts. Personality and
Social Psychology Bulletin, 27(1), 5-14.
Ruggieri, S. (2013). Job selection and social perception: A grounded theory. International Journal of Business
and Management, 8(22), 21-32.
Simon, H. A. (1956). Rational choice and the structure of the environment. Psychological review, 63(2), 129.
Simon, H. A. (1990). Bounded rationality. Journal of Business, 59(4), S209-S224.
Staw, B. M. (1976). Knee-deep in the big muddy: A study of escalating commitment to a chosen course of
action. Organizational Behavior and Human Performance, 16(1), 27-44.
zdroje II
Thorndike, E. L. (1920). A constant error in psychological ratings. Journal of Applied Psychology, 4(1), 25-29.
Wilson, T. D., & Ross, M. (2006). A social psychological look at contrast effects. Psychological Review, 113(4),
803-823.