Fundamental Attribution Error

It is said that as humans we have this capability called the "fundamental attribution error". For those of you who are not clear to what it means, basically it means for humans to have the tendency to overestimate the influence of personality and underestimating the influence of situations. I believe this is the cause of the prejudice and misunderstanding of our relations with other people. Don't you find it true? We do this everyday. Take a hypothetical situation of being in a classroom every new semester starts. We judge people's behavior through the way the situation puts them. If "A", being a hypothetical person is friendly, warm and funny we perceive them to have an outgoing personality. If "A" acted cold, quite and unfriendly, then we inferred that person to be not nice. In other words, we tend to attribute a person's behavior to their personal disposition even when we know that the behavior is "situational". My question here is that, does that mean we are not suppose to judge anyone based on the situation? OF course not. There are times when the fundamental attribution error is to our advantage. If there is someone who is carrying a knife in front of you, surely we "judge" them as someone who we do not want to be with or stay close to. But to what extent should we have this capability? I would say according to context. Whether we achieved this state through biological or evolutionary gene from our ancestors, there are times to use it to our advantage and others we should not. In everyday life, we often struggle to explain other's actions. Our past experiences determines our attribution to decide what is best for us. Whether the consequences is good or bad, we move on with our lives. However, you should know that this attribution theory is evident in our lives. Just think about it, how do you get accepted to your chosen universities? Isn't mostly because of your academic standing, what you do for the community and your reputation as a person? Or your job? For me, its just the way our society has become. We can't exactly blame them for what we have become but the point to remember is to be careful to an individual's dispositions or to their situations. Our actions have REAL consequences.