ARTICLE OPERATIONALIZES TWO BOUNDED RATIONALITY THEORIES OF FEDERAL BUDGETARY DECISIONMAKING AND TESTS THEM WITHIN A STOCHASTIC PROCESS FRAMEWORK. EMPIRICAL ANALYSES OF EISENHOWER, KENNEDY AND JOHNSON DOMESTIC BUDGET DATA, COMPILED FROM OMB PLANNING DOCUMENTS, SUPPORT THE THEORY OF SERIAL JUDGEMENT OVER THE THEORY OF INCREMENTALISM. METHODOLOGICAL LIMITATIONS OF THE THEORIES ARE ALSO DISCUSSED.
Two bounded rationality theories of federal budgetary decision making are operationalized and tested within a stochastic process framework. Empirical analyses of Eisenhower, Kennedy and Johnson domestic budget data, compiled from internal Office of Management and Budget planning documents, support the theory of serial judgment over the theory of incrementalism proposed by Davis, Dempster and Wildavsky. The new theory highlights both the structure of ordered search through a limited number of discrete alternatives and the importance of informal judgmental evaluations. Serial judgment theory predicts not only that most programs most of the time will receive allocations which are only marginally different from the historical base, but also that occasional radical and even "catastrophic" changes are the normal result of routine federal budgetary decision making. The methodological limitations of linear regression techniques in explanatory budgetary research are also discussed.
The interaction among species & chemicals in the food chain often yields potential outcomes that are difficult to foresee. In policy terms, these interactions comprise an information load beyond human cognition, resulting in unexpected side effects, eg, invasions of species, epidemics, air pollution, toxic substances, & endangered species. The policy process attempts to deal with the information problem by using: (1) an incremental approach, (2) a bounding approach, or (3) an uncertainty approach. Unfortunately, the bounding approach excludes all data on interactions outside the apparent cause/effect hypothesis. Possible approaches to augment & improve environmental policy, beyond the bounding approach, are: inquiring into uncertainties & side effects, choosing complex ecologies over simple ones, & sampling for uncertain risks by probability assessments. HA.
ABSTRACTThe interaction among myriad species and chemicals in the food chain often yields potential outcomes which are difficult to foresee. In policy terms, these interactions comprise an information load beyond human cognition, resulting in unexpected side effects. The clearest examples are seen in the invasions of species and epidemics, air pollution, toxic substances, and endangered species. The policy process attempts to deal with the information problem by using (1) an incremental approach, (2) a bounding approach, or (3) an uncertainty approach. Unfortunately, the bounding approach excludes all data on interactions outside the apparent cause/effect hypothesis. Possible approaches to augment and improve environmental policy, beyond the bounding approach, are to inquire into uncertainties and side‐effects, choose complex ecologies over simple ones, and sample for uncertain risks by probability assessments.
THE BOUNDING APPROACH OF THE POLICY PROCESS IN DEALING WITH THE INFORMATION PROBLEM EXCLUDES ALL DATA OUTSIDE THE APPARENT CAUSE /EFFECT HYPOTHESIS. POSSIBLE APPROACHES ARE TO INQUIRE INTO SIDE-EFFECTS AND UNCERTAINTIES, CHOSE COMPLEX ECOLOGIES OVER SIMPLE, AND SAMPLE FOR UNCERTAIN RISKS BY PROBABLITY ASSESSMENTS.
In this paper the implications of cognitive strain for decision‐making effectiveness are explored. Literature concerning the psychological processes of decisionmakers which underlie the operation of cognitive strain and which predispose them to the effects of cognitive strain, is reviewed. Next, the impact of cognitive strain on narrowly constraining or "bounding" rational decision‐making is examined, and the choice strategies of satisficing and incrementalizing are criticized as failing to broaden the bounds of rational decision‐making. Finally, elements of an eclectic choice strategy designed to assist decision‐makers handle the informational demands of complex decision problems are discussed.
Based on the findings and hypotheses of natural hazard research, a survey of earthquake hazard perception and the adoption of adjustments was carried out among 302 residents of 3 seismic risk zones of the west coast of North America. The study provided 3 lines of evidence for the concept of bounded rationality, namely, a preference for crisis response, a limited range of adjustments perceived and adopted, and variations in the perception of risk and uncertainty. Perception and response were found to be associated with the nature of previous experience, perceived salience of the hazard, emotional response, and perceived responsibility, but not with socioeconomic status. The findings are discussed in terms of the rationality of behavior, the role of expectations of future occurrence, differences between earthquakes and other hazards, the true function of adjustments, and the impact of information programs.
This study examines the role of technological variables in the decisions by Egypt, the World Bank, and the United States regarding the selection and financing of the Aswan High Dam project. Three major decision-making models-rational choice, incremental, and organizational process-are assessed according to their appropriateness for and applicability to the "technological dimension." This dimension is defined in terms of three major components-design, impact, and management issues. Despite a tendency of the literature to associate the rational-choice model with highly technical decisions, this study illustrates the dominance of "satisficing," "muddling through," and "bounded rationality" behavior for each of the major participants. The technological dimension is found to be important, but clearly secondary to the primacy of politics.
The federal government in recent years has given substantial relief to victims of natural disasters, largely because such individuals often are not protected by insurance. Standard insurance protects against fire, wind, & hail; flood & earthquake policies can also be purchased, but most residents of hazard-prone areas have not done so. Recent empirical findings support a bounded rationality model of individuals' decisions about unlikely, though potentially severely harmful, events which indicates that individuals must be made graphically aware of the need for insurance to consider purchase. Those who decide to do so are guided by informal networks of friends & neighbors. Policy decisions have to reflect both individual decision processes & value judgments on the tradeoffs between public & private sector roles in natural disasters. 1 Figure. Modified HA.
Normative theory of individual decision, by R. Radner.--Exposition of the theory of choice under uncertainty, by K. J. Arrow.--Representation of preference orderings with independent components of consumption, by T. C. Koopmans.--Representation of preference orderings over time, by T. C. Koopmans.--Comparisons of information structures, by C. B. McGuire.--The value of and demand for information, by K. J. Arrow.--Decisions over time, by M. J. Beckmann.--Theories of bounded rationality, by H. A. Simon.--Normative theories of organization, by R. Radner.--Teams, by R. Radner.--Allocation of a scarce resource under uncertainty, by R. Radner.--Computation in organizations, by T. A. Marschak.--The limit of the core of an economy, by G. Debreu and H. Scarf.--On informationally decentralized systems, by L. Hurwicz.--Publications of Jacob Marschak (p. [337]-341)
