JUDGMENT AND DECISION MAKING

Judgment and Decision making

Judgment and Decision making

Introduction

Judgment and decision making (JDM) refers to an interdisciplinary area of research that seeks to determine how people make judgments and choices. The field considers perspectives from psychology, sociology, and economics; JDM researchers are found in psychology, management, economics, and marketing departments, as well as in schools of medicine, engineering, and public health. As this volume is concentrated on industrial/organizational psychology, we adopt a mostly descriptive (i.e., psychological) perspective in discussing this topic. Psychologists have been concerned mostly with how people actually make decisions, whereas researchers from other areas (e.g., economics) have been concerned mostly with the rules that people should follow when making choices.

EXPECTED UTILITY THEORIES

In general, decisions can be categorized depending on whether the outcomes of the available options are known for sure (decisions under certainty) or whether the outcomes are uncertain and occur with known or uncertain probabilities (decisions under uncertainty). Most research has focused on decisions under uncertainty, because such decisions are more common. Traditional theories of choice under uncertainty, such as subjective expected utility theory (SEUT), posit that choices are derived from only two parameters: (a) the subjective value, or utility, of an option's outcomes and (b) the estimated probability of the outcomes. By multiplying the utilities with the associated probabilities and summing over all consequences, an expected utility is calculated. The option with the highest expected utility is then chosen.

One's culture may influence or mediate the relationship between events occurring in work life and its perceived fairness. Some theorists have recently advocated the importance of using organizational justice as a lens through which to examine different national cultures (Greenberg, 2001). An important question that needs to be addressed is the generalizability of the findings about organizational justice that are based on one culture. From a theoretical point of view, exploring cultural similarity and differences in justice constructs will contribute to the comprehensiveness and universality of justice theories. “From a practical perspective, cross-cultural research can assist managers of multicultural organizations, as well as managers of a culturally diverse workforce within one country, to understand how organizational policies and their implementation impact employees' perceptions of fairness” (Skarlicki, 2001, p. 292). The study of justice perceptions will be incomplete without understanding the differences in national culture. The notion that nations have identifiable cultures that can influence how business is conducted in that nation became a topic of interest through the research work of Hofstede (2001). His approach in studying employees' work-related values represents an evolution in the field's understanding of organizational culture. Much of what we understand about corporate culture and work-related values today is based on the results of his seminal work studying employees at International Business Machines (IBM). He conducted a series of research studies and compiled altogether the data collected from 50 different countries using 20 different languages and more than 116,000 employees ranging seven different occupational levels. The results indicated reliable and meaningful differences among nations as measured through the responses to the attitude ...