Answer to Question #148507 in Finance for Shivani

Question

As the famous saying goes by, “What you see and what you hear depends a great deal on where you are standing. It also depends on what sort of person you are.”

a. Justify this statement by throwing more light on the concept of perception.

b. Also, discuss in depth about few perceptual distortions/errors/bias.

Answer 1

This phrase mostly talks about the difference in human beings' perception of things. It is a balance of nature that what a certain individual perceives might not be what the other one perceives. This is one thing that makes us as a human being diverse in our ways. Depending on one’s personality, the way they view a certain thing might in one way or another differ from another personality type’s view. Besides, the way an individual perceives things also depends on their personal experience. Some individuals who might have faced a lot of pressure from a certain issue are prompted to be harsh and negative in that particular dimension. On their hand, to those whom life has been fair, they are likely to be soft in the views.

Perceptual distortion occurs when human beings are not able to give fair and accurate judgments on things or situations. Some common instances of perceptual distortion are stereotypes, bias, and prejudice (Lakshmisree, 2020). The types of perceptual distortion are selective perception, where individuals base their judgments on their backgrounds, interests, and ideas. Halo effect is the perceptual distortion where someone judges a situation or another person by only looking at one side of the story/trait. Stereotypes are where people are grouped into various classes and judgment is made depending on the various classes. The contrast effect occurs when people are compared to others and are judged depending on how they compare. Projection is an individual's attitude towards other people, and they mostly judge them negatively due to the negative attitude cultivated. The impression is the perceptual distortion where judgment is made depending on the person's first impression. 

To avoid these perceptual distortions, some strategies can be used. Some of these strategies include showing empath to others, cultivating a positive attitude towards others, holding open communication, ignoring first impressions, and listening to other people's perceptions before making a judgment. Therefore, what a person sees and hears depends on where he is standing, and on the type of person they are. However, the above strategies can be used to control or avoid perceptual errors.

References

Ghosh, L. (2020, May 19). Perceptual errors and their types. LinkedIn. https://www.linkedin.com/pulse/perceptual-errors-its-type-lakshmisree-ghosh