Impact of Perception on Decisions

Ever wonder about the decisions we make in our daily lives and how we arrive at it?

Do we practice data-driven logical thinking? OR select data-points that suit our pre-conceived notion/decision?

'If we torture data long enough, it will confess to anything.'

Ronald Coase

Some decisions, like impulse shopping during grocery trips, don't need a lot of rigor, but what about important decisions like purchasing a property or selecting the right candidate during elections?

Decision-making is an established field of study that includes multiple disciplines – neuroscience, psychology, economics, to name a few. I have focused on one aspect – Perception.

Perception is an essential factor influencing our decisions – the extent of influence will depend on the type of decision. Let us look at some scenarios -   

Coffee Shop

Let's say you are trying a new hip coffee shop, and you are not sure if the coffee is any good for the price. The online reviews seem positive, and you decide to give it a try.

If the interiors look like this –

You will probably make certain assumptions based on what you see (the ambiance, people happy/irate, menu visible with options, etc.), and smell (fresh ground coffee, clean environment). You can relate it to reviews and decide if you wish to stay.  

That is the first decision point – if the objective is to have good coffee, the decision to stay depends on the perception formed in your mind about the coffee shop.

Perception meets reality after you try the coffee. You may love it, reinforcing the positive perception, or not like it, creating a negative perception (and probably a resolve not to trust online reviews!).

What's the big deal about a cup of coffee, you ask? Let's look at another scenario.

Elections

In an ideal world, candidates put forward their policies and debate on its merits. If voters have access to the same information, they can judge how best these policies are aligned to their interests and beliefs before deciding the right candidate. 

However, most voters won't bother reading policies. They rely on the interpretation from news channels + social media. Also, in polarized elections, elements of fear/anxiety/social issues are leveraged to make sure voters stick to their 'base,' making policies secondary.

How can we be sure that the candidates will follow through on those promises? We are electing a candidate based on our perception of how they will perform in the future.

We look at the candidate through our physical senses – physical attributes, body language, confidence, and take cues from debates/speeches, interviews, social media. Using this input and assumptions based on our experience, we create a perception of the candidate's leadership potential and cast a vote.

Perception meets reality when we see their actions after the election, reinforcing our perception or changing it. 

What is Perception?

It's not what we look at that matters; it's what you see

Henry David Thoreau

At a basic level, perception is a psychological process based on sensory experience. We use our five senses (vision, smell, hearing, taste & touch) to gather information. The physical stimuli are recorded as electrical signals in our brain and interpreted for their meaning (based on past experiences, memories, attitudes, etc.). As our experiences differ, so does our perception. That's why two individuals with access to the same information may have different perceptions.

Perception enables us to take a short-cut to an otherwise long and complicated decision-making process. The ability has evolved through our ancestors, who had to use their physical senses to make important fight/flight decisions impacting their survival. Over generations, our ability to use our perception to evaluate reality, although not perfect, has benefitted us, as our brains don't need to analyze every environmental stimulus.

Like any process, it is not perfect. Sometimes perception could mislead you from reality, which is how an illusionist performs his act. You look at an illusion, our perception creates an expected outcome, but the truth is different.

An interesting example is the McGurk effect, where the hearing and vision senses are paired to create a speech perception.

Here is a video as an example of the McGurk effect.

The example is simple and deals with speech perception created by audio + visual senses. There isn't a decision to be made; however, extrapolate this example to all the ways our brains perceive reality, and you see the magnitude to which factors outside our control can influence our decisions.

In an ideal world, our perception should inform the reality. If there is a divergence, the realization should update our perception. However, increasingly we live in a world of 'echo chambers,' where the sources of inputs/information tend to be more of the same (social media, biased news coverage, etc.), which reinforces our existing perceptions.

Similarly, businesses create a perception of their product/service, and leaders develop their leadership perception. They are not aiming for an illusion (well, maybe sometimes!), but a differentiator to stand out from the competition.

If the perception they create matches reality, then we have loyalty else its disillusionment.

Why does it matter, anyway?

Most times, we are either trying to influence a decision or getting influenced. Understanding our perceptions can help us see through our biases and make balanced decisions. On the flip side, if we know the impact of perception, we can leverage the information to decide in our favor. Some sample scenarios - 

• Promotion/Raise – in addition to data on your KPIs, what is your manager's perception about you?
• Brand – what do consumers think of your brand, and would they stay loyal regardless of promotions/discounts/competitor activity?
• Leadership – how do your team, peers, and management perceive your leadership? 

I thought I would write a blog that covers all aspects of perception. I would have answers to everything – like 42 (answer to the Ultimate Question of Life, The Universe, and Everything). However, as I researched this topic, I realized I have more questions than answers. 

Have you encountered a situation where your perception influenced an important decision?

Stay safe,

Sameer Inamdar

https://www.dhirubhai.net/in/saminamdar/