ORGANIZATIONAL BEHAVIOR

CHAPTER FOUR
What are emotions and moods?
1. Affect: Affect is defined as broad range of feelings that people experience.
Affect can be experienced in the form of emotions or moods
2. Emotions: Emotions are intense feelings that are directed at someone or something.
Emotions are reactions to a person or an event when show emotions when we are happy, sad or afraid.
Most experts believe that emotions are fleeting than moods. For example, if a person is rude to you, you
will feel angry that intense feeling or emotion come and go fairly quickly.
3. Moods: Moods are less intense feelings than emotions that often lack contextual stimulus.
Moods are not usually directed at a person or event.
DIFFERENCE BETWEEN EMOTIONS AND MOODS
NO EMOTIONS ARE N MOODS ARE
O
1 Caused by specific event. 1 Cause in often general and unclear.
2 Very brief in durations like for minutes or seconds. Lost longer than emotions like for hours or
2
days.
Specific and numerous in nature and many specific More general two main dimensions positive
3 emotions such as happiness, anger, fear, sadness, 3 affect and negative affect that composed of
disgust and surprise are very specific. multiple specific emotions.
4 Usually accompanied by distinct facial expressions. 4 General not indicated by distinct expressions.
5 Action oriented in nature. 5 Cognitive in nature.
List of the basic emotions List of the basic moods
There are dozens emotions that include anger, contempt, we cans say that a positive affect as mood dimension
enthusiasm, envy, fear, frustration, disappointment, hate, consisting of positive emotions such as excitement, self-
embarrassment, disgust, happiness, jealousy, hope, love, joy, assurance and cheerfulness at high end.
pride, surprise or shock, grief and sadness and so on. Boredom, sluggishness, and tiredness at the low end.
One way to classify emotions is by whether they are positive positive affect a negative affect is mood dimension
or negative positive emotions such as, joy and gratitude which
that consists of emotions such as nervousness, anxiety,
expresses favorable evaluation or feeling.
stress, at the high end & relaxation, tranquility & poise
Negative emotions such as, anger or guilt which expresses the
at the low end. So we can say that positive and negative
opposite positive emotion or unfavorable feelings.
affect are moods.
THE STRUCTURE OF MOOD
 ORGANIZATIONAL BEHAVIOR
POSITIVE OFFSET:
The tendency of most individuals to experience mildly positive mood at zero input when nothing in particular is
going on.
THE FUNCTIONS OF EMOTIONS
Discuss whether emotions are rational and what functions they serve:
Emotions are critical to rational thinking, decision-making or thought.
Our emotions provide important information about how we understand the world around us.
We must have the ability to experience to emotions to be rational.
Emotions help us understand the world around us.
Expressing emotions publicly may be damaging to social status
What Functions Do Emotions Serve?
Emotions can help in survival problem-solving.
Evolutionary psychology: An area of inquiry which argues that we must experience the emotions we do
because they serve a purpose. Not all researchers agree with this assessment
SOURCES OF EMOTIONS AND MOODS
Identify the sources of emotions and moods:
There are some certain sources of emotions and moods:
1. Personality:
Most people have built in tendencies to experience certain moods & emotions more frequently than others do.
Affect Intensity individuals differences in the strength which individuals experience their emotions.
2. Day of the Week and Time of the Day:
The day later in week or near to week end is felt with good emotions and moods and early time of the day is felt
with bad moods. Regardless of what time we go to bed at night or get up in the morning.
3. Weather:
People are of the opinion that their moods are good or bad due to weather conditions but research has not such
evidence. Illusory correlation the tendency of people to associate two events when in reality there is no
connection.
4. Stress:
The mounting level of stress worsens our moods and we experience more negative emotions. Stress takes toll
on our moods.
5. Social Activities:
For most people social activities increase positive mood and have little effect on negative mood, research
suggests activities that are physical, informal, and epicurean (eating with others) create more positive affect
than attending meetings and e sedentary (TV watching).
6. Sleep:
Sleep quality does affect mood and people who deprived sleep often feel fatigue, anger and hostility, less and
poor quality puts in bad mood and impairs decision making and control on emotions.
7. Exercise:
Research consistently shows that exercise enhances positive moods and exercise may help put us in a
better mood, but not much strong and do not expect miracles.
8. Age: The study implies that people learn to improve emotional experience with age, as they get older then
they experience fewer negative emotions and early age is with good moods.
9. Gender:
Many women experience emotions more intensely as compared to men except anger, but it depends how
someone is culturally socialized and there are differences in the experience and expression of emotions.
Men are more tough- expression of emotions distorts the masculine image. Women are expected to express
more positive emotions than men for example shown by smiling.
 ORGANIZATIONAL BEHAVIOR
EMOTIONAL LABOR
Show the impact emotional labor has on employees
Emotional labor is a situation in which an employee expresses organizationally desired emotions during
interpersonal transactions at work and the concept of the emotional labor emerged from the studies of service.
Emotional dissonance is inconsistencies between the emotions people feel and the emotions they project.
Emotional labor creates dilemma for employees. Emotional labor and emotional dissonance affect how an
employee performs at work. Emotional labor is an indicator of how employees can handle adversity at work if
they let their emotions hurt their work. Emotional dissonance occurs when employees are not able to control
their emotions. Their real emotions become an obstacle to job performance. Managers can identify workers who
are having emotional dissonance and provide an outlet and training to help them deal with personal issues. This
way the employees are able to perform on the job positively by solving personal issues.

Emotions can be felt and displayed emotions

1. Felt emotions are an individuals actual emotions.
2. Displayed emotions are those that the organizations require workers to show and consider appropriate.
3. Surface acting is hiding inner feelings & forgoing emotional expressions in response to display roles. Deals with felt emotions.
4. Deep acting is trying to modify our true inner feelings based on dis-patients. It deals with displayed emotions.

EFFECTIVE EVENTS THEORY

Effective events theory is a mode that suggests that workplace events cause emotional reactions on the part of
employees which then influence workplace attitudes and behaviors.
An emotional episode is actually a series of emotional experiences triggered by a single event.
Current and past emotions affect job satisfaction at any given time alone with the history of emotions surrounding
the event.
Emotional fluctuations over time create variations in job performance.
Emotion-driven behaviors are typically brief and variable.
Both negative and positive emotions can distract workers and reduce job performance.
AET OFFERS TWO IMPORTANT MESSAGES
Emotions provide valuable insights into how workplace hassles and uplifting events influence employee
performance and satisfaction.
Emotions, and the events that cause them, should not be ignored at work because they accumulate.
EMOTIONAL INTELLIGENCE
Contrast the evidence for and against the existence of emotional intelligence.
 ORGANIZATIONAL BEHAVIOR
EI is controversial and not wholly accepted.
The case for EI
Intuitive appeal.
Predicts criteria that matter.
Is biologically-based.
EI is controversial and not wholly accepted.
The case against EI
Researchers do not agree on definitions too vague as a concept.
Cant be measured.
Is nothing but personality with a different label.
OB APPLICATIONS OF EMOTIONS AND MOODS
Apply Concepts about Emotions and Moods to Specific OB Issues.
1. Selection
EI should be a factor in hiring employees, especially in jobs that demand high degree of social interaction.
2. Decision Making
Positive emotions and moods have important effects on decision making and lead to better decision making.
3. Creativity
Positive mood increases flexibility, openness, and creativity in thinking of new ideas.
4. Motivation
Positive mood affects expectations of success. Feedback amplifies this effect.
Positive mood cause people to be more creative which leads to positive feedback from those observing their
work.
5. Leadership
Emotions are important to acceptance of messages from organizational leaders.
Effective leaders rely on emotional appeals to help convey their messages.
6. Negotiation
Negotiation is an emotional process. However, we often say a skilled negotiator has a porker face.
Emotions can affect negotiations. For example, anger leads to bad outcomes.
7. Customer Service
A workers emotional state influences customer service which influences levels of repeat business and
of customer satisfaction.
8. Emotional contagion: Emotional contagion is catching of emotions from others. Emotional contagion is
important because customers who can catch the positive moods or emotions of employees.
Job Attitudes
Job attitudes are very important for the better performance and betterment of the work.
A good day at work tends to be followed by a good mood at home and vice versa.
This usually dissipates overnight.
Deviant Workplace Behaviors
Negative emotions lead to workplace deviant behaviors.
Actions that violate norms and threaten the organization.
Safety and Injury at Work
Dont do dangerous work when in a bad mood.
How Managers Can Influence Moods
Use humor and praise to increase employees positive moods.
Being in a good mood oneself can result in more positivity and better cooperation.
Selecting positive team members can have a contagion effect.
Global Implications for Managers
 ORGANIZATIONAL BEHAVIOR
To foster effective decision making, creativity, and motivation in employees, look to model positive
emotions and moods as much as is authentically possible.
Provide positive feedback to increase the positivity of employees.
In the service sector, encourage positive displays of emotion, which make customers feel more
positive and thus improve customer service interactions and negotiations.

Regulate your intense emotional responses to an event by recognizing the legitimacy of the emotion
and being careful to vent only to a supportive listener who is not involved in the event.
Be careful not to ignore co-workers and employees emotions; do not assess others behavior as if it
were completely rational.

CHAPTER FIVE
PERSONALITY AND VALUES
Define personality, describe how it is measured and explain the factors that determine an
individuals personality.
The sum total of ways in which an individual reacts to and interacts with others.
Most often described in terms of measurable traits that a person exhibits, such as shy, aggressive,
submissive, lazy, ambitious, loyal and timid.
Ways to measure personality:
Self-reports Surveys:
The most common means of measuring personality is though self-report surveys with which
individuals evaluate themselves on a series of factors. It is most common and prone to error.
Observing-ratings surveys:
Observing-rating surveys provide an independent assessment of personality.
May be more accurate that we can measure the personality with.
Personality Determinants
Heredity Factor:
Heredity the factors determined at conception; ones biological, psychological and inherent psychological makeup.
Heredity is the most dominant factor Twin studies: genetics more influential than parents
Environmental factors do have some influence.
Aging influences levels of ability basic personality is constant.
Measuring Personality Traits:
(Personality traits enduring characteristics that describe an individuals behavior.)
Describe the Myers-Briggs Type Indicator personality framework and assess its strengths and weakness.
The MBTI is a personality test that taps four characteristics and classifies people into 1 of 16 personality types.
The (BMTI) is the most widely used personality-assessment instrument in the world. It is a 100 question personality
test that asks people how they usually feel or act in particular situations on the basis of answers:
Individuals are classified as:
1. Extroverted or Introverted: Extraverted individuals are outgoing, sociable, and assertive,
introverts are quiet and shy.
2. Sensing or Intuitive: sensing types are practical and prefer routine and order. They focus on
details. Intuitive rely on unconscious processes and look at the big picture.
3. Thinking or Feeling: Thinking types use reason and logic to handle problems. Feeling types rely on
their personal values and emotions.
 ORGANIZATIONAL BEHAVIOR
4. Judging or Perceiving: Judging types want control and prefer their world to be ordered and
structured. Perceiving types are flexible and spontaneous.
Classifications combined into 16 personality types with every person identified with one of the items in each of
the four pairs. Lets explore several examples introverted, intuitive, thinking and judging people.

Identify the key traits in the Big Five personality model:

Big Five Model is an impressive body of research supports its thesis that five basic dimension underlie al l others
and encompass most of the significant variation in human personality. The following are the Big Five Factors:
1. Extraversion: The extraversion dimension captures our comfort level with relationships. Extraverts tend to be
gregarious, assertive and sociable. Introverts tend to be reserved, timid and quit.
2. Agreeableness: The agreeableness dimension refers to an individuals propensity to defer to others. Highly
agreeable people are cooperative, warm and trusting. People who score low on agreeableness are cold,
disagreeable and antagonistic.
3. Conscientiousness: The conscientiousness dimension is a measure of reliability. A highly conscientious
person is responsible, organized, dependable and persistent. Those who score low this dimension are easily
distracted, disorganized and unreliable.
4. Emotional Stability: The emotional stability dimension often labeled by its converse, neuroticism-taps a
persons ability to withstand stress, people with positive emotional stability tend to be calm, self-confident and
secure. Those with high negative scores tend to be nervous, anxious, depressed & insecure.
5. Openness to experience: A personality dimension that characterizes someone in terms of imagination,
sensitivity and curiosity. The openness to experience dimension addresses range of interests and fascination with
novelty.
Demonstrate how the Big Five traits predict behavior at work:
Research has shown this to be a better framework. Certain traits have been shown to strongly relate to higher
job performance: Highly conscientious people develop more job knowledge, exert greater effort and have better
performance. Other Big Five Traits also have implications for work.
Emotional stability is related to job satisfaction.
Extroverts tend to be happier in their jobs and have good social skills.
Open people are more creative and can be good leaders.
Agreeable people are good in social settings.
Other Personality Traits Relevant to OB
Core Self-Evaluation:
The degree to which people like or dislike themselves
Positive self-evaluation leads to higher job performance
Machiavellianism:
A pragmatic, emotionally distant power-player who believes that ends justify the means
High Machs are manipulative, win more often, and persuade more than they are persuaded.
Flourish when:
Have direct interaction
Work with minimal rules and regulations
Emotions distract others

Narcissism:
 ORGANIZATIONAL BEHAVIOR
An arrogant, entitled, self-important person who needs excessive admiration
Less effective in their jobs

Self-Monitoring
The ability to adjust behavior to meet external, situational factors.
High monitors conform more and are more likely to become leaders.

Risk Taking
The willingness to take chances.
May be best to align propensities with job requirements.
Risk takers make faster decisions with less information.

Types More:
Type A Personality:
Aggressively involved in a chronic, incessant struggle to achieve more in less time
Impatient: always moving, walking, and eating rapidly
Strive to think or do two or more things at once
Cannot cope with leisure time
Obsessed with achievement numbers
Prized in North America, but quality of the work is low
Type B people are the complete opposite
Proactive Personality
People who Identify opportunities, shows initiative, takes action, and perseveres to completion and until
meaningful change occurs.
Creates positive change in the environment

Values
Define values, demonstrate the importance of values and contrast terminal and instrumental values:
Values are basic convictions that a specific mode of conduct or end-state of existence is personally or
socially preferable to an opposite or converse mode of conduct or end-state of existence.
Value system: A hierarch based on ranking of an individuals values in terms of their intensity.
Represent a prioritizing of individual values by:
Content importance to the individual
Intensity relative importance with other values
The hierarchy tends to be relatively stable
Values are the foundation for attitudes, motivation, and behavior.
Influence perception and cloud objectivity.
Importance of Values
Provide understanding of the attitudes, motivation, and behaviors
Influence our perception of the world around us
Represent interpretations of right and wrong
Imply that some behaviors or outcomes are preferred over others
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Terminal Values
Desirable end-states of existence; the goals that a person would like to achieve during his or her lifetime
EXAMPLES OF TERMINAL VALUES
A comfortable life (a prosperous life)
An exciting life (stimulating, active life)
A sense of accomplishment (lasting contribution)
A world of peace (free of war and conflict)
A world of beauty (beauty of nature and the arts)
Equality (brotherhood, equal opportunity for all)
Family security (taking care of loved ones)
Freedom (independence, free choice)
Happiness (contentedness)

Instrumental Values
Preferable modes of behavior or means of achieving ones terminal values
People in same occupations or categories tend to hold similar values.
But values vary between groups.
Value differences make it difficult for groups to negotiate and may create conflict.
EXAMPLES OF INSTRUMENTAL VALUES
Ambitious (hard working, aspiring)
Broad-minded (open-minded)
Capable (competent, efficient)
Cheerful (lighthearted, joyful)
Clean (neat, tidy)
Courageous (standing up for your beliefs)
Forgiving (willing to pardon others)
Helpful (working for the welfare of others)
Honest (sincere, truthful)

GENERATIONAL VALUES
Compare generational differences in values and identify the dominant
values in todays workforce.

Linking Personality and Values to the Workplace

 ORGANIZATIONAL BEHAVIOR
Managers are less interested in someones ability to do a specific job than in that persons flexibility.

Person-Job Fit:
John Hollands Personality-Job Fit Theory: A theory that identifies six personality types and proposes
that the fit between personality type and occupational environment determines satisfaction and turnover.
Six personality types
1. Realistic (Prefers physical activities that require skill, strength and coordination.)
2. Investigative (Prefers activities that involve thinking, organizing, and understanding.)
3. Artistic (Prefers ambiguous and unsystematic activities that allow creative expression.)
4. Social (Prefers activities that involve helping and developing others.)
5. Enterprising (Prefers verbal activities in which there are opportunities to influence others and attain power.)
6. Conventional (Prefers rule-regulated, orderly and unambiguous activities.)
Need to match personality type with occupation

Key Points of the Model:

There appear to be intrinsic differences in personality between people.
There are different types of jobs.
People in jobs congruent with their personality should be more satisfied and have lower turnover.
In addition to matching the individuals personality to the job,
managers are also concerned with:

Person-Organization Fit:
The employees personality must fit with the organizational culture.
People are attracted to organizations that match their values.
Those who match are most likely to be selected.
Mismatches will result in turnover.
Can use the Big Five personality types to match to the organizational culture.

GLOBAL IMPLICATIONS
Identify Hoftedes six value dimensions of national culture.
1. Power distance: A national culture attribute that describes the extent to which a society accepts that power in
institutions and organizations is distributed unequally.
2. Individualism: A national culture attribute that describes the degree to which people prefer to act as individuals
rather than as members of groups
3. Collectivism: A national culture attribute that describes a tight social framework in which people expect others in
groups of which they are a part to look after them and protect them
4. Masculinity: A national culture attribute that describes the extent to which the culture favors traditional
masculine work roles of achievement, power and control. Societal values are characterized by assertiveness and
materialism.
5. Femininity: A national culture attributes that indicates little differentiation between male and female roles; a
high rating indicates that women are treated as the equals of men in all aspects of the society.
6. Uncertainty Avoidance: A national culture attribute that describes the extent to which a society feels threatened
by uncertain and ambiguous situations and tries to avoid them.
A. High Uncertainty Avoidance:
i. Society does not like ambiguous situations and tries to avoid them.
B. Low Uncertainty Avoidance:
i. Society does not mind ambiguous situations and embraces them.

TIME ORIENTATION
 ORGANIZATIONAL BEHAVIOR
Long-term Orientation
A national culture attribute that emphasizes the future, thrift, and persistence
Short-term Orientation
A national culture attribute that emphasizes the present and the here-and-now

Chapter six
Perception and individual decision making
Explain perception and explain the factors that influence it.
Perception is a process by which individuals organize and interpret their sensory impressions in order to
give meaning to their environment.
What we perceive can be substantially different from objective reality.
Why is it important in O.B.?
Because peoples behavior is based on their perception of what reality is, not on reality itself.
The world as it is perceived is the world that is behaviorally important.
Factors that influence perception
1.Factors in the Perceiver.
Attitudes, Motives, Interests, Experience, Expectations.
2. Factors in the situation.
Time, Work setting, Social setting
3. Factors in the target.
Novelty, Motion, Sounds, Size, Backgrounds, Proximity, Similarity.
Factors that influence perception
1.Factors in the Perceiver.
Eg. If you expect Police officers to be authoritative, young people to be lazy, or politicians to be unscrupulous,
you may perceive them as such, regardless of what they may actually be.
2. Factors in the situation.
Eg. At a nightclub on Saturday night, you might not notice a young man dressed to the nines. Yet that same
person dressed in the same manner in the afternoon O.B. class would warrant a lot of attention.
3. Factors in the target.
Eg. We have a tendency to group close or similar things together. We often perceive women, men, whites,
African Americans, Asians, or members of any other group as alike in other, unrelated ways as well.

Explain attribution theory and list the three determinant of attribution.

Attribution theory is an attempt to determine whether an individuals behavior is internally or externally
caused. Internally caused behaviours are those we believe to be under the personal control of the
individual. Externally caused behaviour is what we imagine the situation forced the individual to do.
E.g. An employee arrives late. You attribute that to partying late into the night and then waking up late
Internal attribution. You attribute it to a traffic jam on the way to work external attribution.
Determinant:
1.Distinctiveness Determinant:
Distinctiveness refers to whether an individual displays different behaviours in different situations.
Different levels of performance on different related tasks High distinctiveness External attribution
Same levels of performance on different related tasks - Low distinctiveness Internal attribution
2. Consensus:
If everyone who faces a similar situation responds in the same way, we can say the behaviour shows
consensus. If consensus is high, then we give an External attribution to the act which was not
congruent with the consensus. Eg. If everyone who took a new route to work was late on a particular
day, consensus is high; therefore we give an external attribution to the act., whereas if only 1 person
was late, then we would look to give an internal attribution.

3. Consistency :
The more consistent the behaviour, the more we are inclined to attribute it to internal causes.
 ORGANIZATIONAL BEHAVIOR
Eg: Coming to work late once in a while - External attribution
Coming to work late 3 times a week - Internal attribution

Fundamental attribution error:

The tendency to underestimate the influence of external factors and overestimate the influence of internal factors
when making judgements about the behaviour of others. Eg. A sales manager is prone to attribute the poor
performance of her sales agents to laziness rather than to the innovative product line introduced by a competitor.

Self serving Bias :

The tendency for individuals to attribute their own successes to internal factors and put the blame for failures
on external factors. E. g. Researchers asked one group of people If someone sues you and you win the case,
should he pay your legal costs? 85% responded yes. Another group was asked: If you sue someone and lose
the case, should you pay his costs?
Identify the shortcuts individuals use in making judgments about others:
1. Selective Perception:
The tendency to selectively interpret what one sees on the basis of ones interests, background,
experience and attitudes. Eg.1 You are more likely to notice cars like your own. Eg.2 23 business
executives (6 in sales, 5 in production, 4 in accounting, 8 in miscellaneous functions) to read a
comprehensive case describing the organization and activities of a steel company. Each manager was
asked to write down the most important problem in the case. 83% of the sales executives rated sales
important. Only 29% of the others did so. Conclusion: Participants perceived as important the aspects of
a situation specifically related to their own units activities and goals.
2. Halo Effect:
The tendency to draw a general impression about an individual on the basis of a single characteristic.
E. g: If you are a critic of Manmohan Singh, try listing 10 things you like about him.
If you are an admirer of Manmohan Singh, try listing 10 things you do not like about him.
Not easy! That is because OUR GENERAL VIEWS CONTAMINATE OUR SPECIFIC ONES.
3. CONTRAST EFFECT:
Evaluation of a persons characteristics that is affected by comparisons with other people recently
encountered who rank higher or lower on the same characteristics. E.g. In a series of Job Interviews, a
candidate is likely to receive a more favorable evaluation if preceded by mediocre applicants and a less
favorable evaluation if preceded by strong applicants.
4. STEREOTYPING:
Judging someone on the basis of ones perception of the group to which that person belongs gender,
race, religion, ethnicity, and weight. E. g: Women wont relocate for a promotion. Men arent interested
in childcare. Older workers cant learn new skills. Overweight people lack discipline.
SPECIFIC APPLICATIONS OF SHORT CUTS IN ORGANISATIONS:
1. Employment interview:
Early impressions become entrenched. First impressions can be formed in 1/10 of a second. First
impressions get much more weightage than impressions formed later. Very little change in interviewers
decisions after the first 4 -5 minutes of an interview.
2. Performance expectations:
Self-fulfilling prophecy: A situation in which an individual behaves in ways consistent with the
inaccurate perceptions about him by a second individual. E. g: Students, soldiers, employees.
3. Performance evaluation :
Appraisals can be objective e.g. sales subjective appraisals can be problematic because all the
perceptual errors creep in selective perception, contrast effects, halo effects, and so on.
 ORGANIZATIONAL BEHAVIOR
Explain the link between perception and decision making.
The link between Perception and Individual decision making:
Decision making occurs as a reaction to a problem.
But, one persons problem is another persons satisfactory state of affairs.
So, awareness that a problem exists and that a decision might or might not be needed is a perceptual
issue. Every decision requires interpreting and evaluation information.
Which data are important, which are not again a matter of perception.
Perceptual distortions can bias analysis and conclusions throughout the decision making process.
Problem is a discrepancy between the current state of affairs and some desired state.
Decisions are choices made among two or more alternatives.
Apply the rational model of decision making and contrast it with bounded
rationality and intuition
Decision making in organizations:
1. Rational model
2. Bounded rationality
3. Intuition
1. Rational: Characterized by making consistent, value maximizing choices
within specified constraints.
1. RATIONAL MODEL
Steps: 1.Define the Problem. 2.Identify the decision criteria . E.g. All the relevant information difficult.
3. Allocate weights to the criteria Again, difficult. 4. Develop the alternatives. 5. Evaluate the
alternatives. 6. Select the best alternative. Most decisions in the real world dont follow the rational
model. People are content with an acceptable or reasonable solution rather than an optimal one.
2. BOUNDED RATIONALITY :
A process of making decisions by constructing simplified models that extract the essential features from
problems without capturing all their complexity. The information processing capacity of humans is
limited. So most people reduce complex problems to a level at which they can readily understand it.
3. INTUITION:
An unconscious process created out of distilled experience. Perhaps the least rational way to make
decisions, but not necessarily wrong. It is a highly complex and highly developed form of reasoning that
is based on years of experience and learning.
List and explain common decision biases or errors
Common Biases and errors in decision making are:
1. Overconfidence Bias.
2. Anchoring Bias.
3. Confirmation Bias.
4. Availability Bias.
5. Escalation of commitment.
6. Randomness error.
7. Risk aversion.
8. Hindsight Bias.
1. Overconfidence Bias:
Most common and most catastrophic Bias. Fools rush in where Angels fear to tread.
Individuals whose intellectual and interpersonal abilities are weakest are most likely to
overestimate their performance and ability. As managers and employees learn more about an
issue, they tend to become less likely to be overconfident about it.
 ORGANIZATIONAL BEHAVIOR
2. Anchoring Bias :
A tendency to fixate on initial information and fail to adequately adjust for subsequent information.
3. Confirmation Bias :
The tendency to seek out information that re affirms past choices and to discount information that
contradicts past judgments.
4. Availability Bias :
The tendency for people to base their judgments on information that is readily available to them. EXP:
Managers doing performance appraisals give more weight to recent employee behaviours than to
behaviours of 6 or 9 months earlier. Air travel vs Car driving.
5. Escalation of commitment:
An increased commitment to a previous decision in spite of negative information. E.g. Throwing good
money after bad in the stock market. Happens when individuals see themselves as the cause of the failure.
6. Randomness Error::
The tendency of individuals to believe that they can predict the outcome of random events.
Decision making suffers when we try to create meaning in random events. E.g. Superstitions.
7. Risk aversion:
The tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier
outcome might have a higher expected payoff. E.g. Sure rs.50 vs. flip of coin for rs.100. Mathematically
both are the same but which one would people choose? Risk adverse employees will stick to the
established way of doing things.
8. Hindsight Bias:
The tendency, to believe falsely, after an outcome of an event is actually known, that one would have
accurately predicted that outcome. Reduces our ability to learn from the past.
Makes us think we are better predictors than we are, can make us falsely confident.

Explain how individual differences and organizational constraints affect decision making.
Influences on decision making :
Individual differences
1. Personality
2. Gender
3. Mental ability
1. Personality :
E.g. People with high self-esteem are strongly motivated to maintain it, so they use the self-serving bias
to preserve it. They blame others for their failures while taking credit for successes.
2. Gender :
Rumination refers to reflecting at length. In terms of decision making, it means overthinking problems.
Who ruminates more? Men or Women? Pros: More careful consideration of problems.
Cons: Can make problems harder to solve, increase regret over past decisions, increase depression.
3. Mental ability :
Smart people are better at work. Once warned about decision making errors, more intelligent people
learn more quickly to avoid them.
 ORGANIZATIONAL BEHAVIOR
Organizational constraints on decision making:
1. Performance evaluation
2. Reward systems
3. Formal regulations
4. System imposed time constraints.
5. Historical precedents.
1. Performance evaluation
E.g. If a hospital administrator believes the wards under his responsibility are operating best when he
hears nothing negative, we should not be surprised to find his ward staff doing their best to ensure that
negative information does not reach him.
2. Reward systems
E.g. from the 1930s through the 1980s, General Motors consistently gave promotions and bonuses to
managers who kept a low profile and avoided controversy. They became very adept at dodging tough
issues and passing controversial decisions on to committees.
3. Formal regulations
Limits decision choices.
4. System imposed time constraints.
Deadlines make it difficult for managers to gather all the information they might like before making a
final choice.
5. Historical precedents.
E.g. the largest determinant of the size of any given years budget is last years budget.
Contrast three ethical decision criteria
ETHICS IN DECISION MAKING:
3 Ethical decisions criteria
1. Utilitarianism:
A system in which decisions are made to provide the greatest good for the greatest number.
2. Fundamental liberties and privileges:
Individuals who report unethical practices by their employer to outsiders. EG. Protection to whistleblowers.
3. Justice: Equitable distribution of benefits and costs. E. g: Paying people the same wage for a given job
regardless of performance differences and using seniority as the primary determination in layoff decisions.
Define creativity and discuss three components model of creativity.
Creativity: Creativity is the ability to produce novel and useful ideas.
Three-components model of creativity: The proposition that individual creativity requires expertise,
creativity thinking skills and intrinsic task motivation.
1. Creativity Thinking Skills: This encompasses personality characteristics associated with creativity,
the ability to use analogies and the talent to see the familiar in a different light.
2. Expertise: Expertise is the foundation for all creative work, the film writer, producer and director
Ahmad for example spent his youth working in a video rental store.
3. Task motivation: This is the desire to work on something because its interesting, involving, exciting,
satisfying or personally challenging it what turns creativity potential into actual creative ideas.