Bounded rationality

“What is rational for administrators to do depends on the situations in which they work. Pressed for quick recommendations, they cannot begin long studies. Faced with organizational rivalries, competition, and turf struggles, they may justifiably be less than wholly candid about their own plans. What is sensible to do depends on the context one is in, in ordinary life no less than in public administration.”

John Forester, 1984, p. 23.

This thesis draws on the bounded rationality (Simon, 1947, 1979) concept to examine decision-making within the framework of intervention. Bounded rationality highlights the constraints in decision-making. For instance,

individuals’ intended “rational” actions are bounded by a number of factors.

These might include actors’ own beliefs, limited resources, time constraints, the need to meet the terms of bilateral agreements or fulfill policy goals. Thus, the bounded rationality and institutional logics concepts offer an explanation for why individuals, who would otherwise act rationally, are constrained and behave in a certain way and how a particular institutional logic might shape individuals’

actions. The above formulations suggest the unpredictability in decision making processes.

Politics is often shaped by unpredictable circumstances and global forces accelerate the timeframe in policy processes (Benner, 2012). Unpredictable events, time constraints, vague and limited information are factors that bound even those individuals who intend to make rational choices.

From the rational choice perspective, internationalization reflects deliberate choices made by actors to reach optimal solutions (Gornitzka et al. 2003).

However, given the complexity of decision-making processes, we should assume that deliberate rational choices are influenced by a number of factors. Political actions and choices policy actors make are often subject to uncertainties, disjunction of intentions, random processes, and possibly conflicts. Elements such as lack of clarity regarding purpose and long-term vision of STI cooperation programs and the need to be pragmatic and practical when implementing policies bound individuals’ choices by steering them not to maximization of results but towards satisficing. Satisficing is defined as the attainment of satisfactory results instead of optimal. Given the above influences, achieving an “ideal” form of policy making might be unrealistic. In efforts to simplify complex decision making processes, policy actors might act in a pragmatic way. This approach might also be taken in order to shorten potential long solving processes. “Satisficing is a ‘weak method,’ which problem-solvers apply when task domains are ill-structured or are unknown; it allows them to halt the search process when a solution meets their aspiration threshold”

(Fiori, 2011, p. 590).

A presumably linear policy-making approach would involve the identification of problems and goal, search for solutions to address problems, establish the outcome and make a choice that will accrue the most benefits to society. This policy path, however assumes no inconsistency or tensions. It assumes engaged and motivated actors, easy access to information and reasonable expectations on

outcomes. Also, “comprehensive rationality,” a term used by economist Gary Becker (1976) presumes that individuals have preferences and respond to incentives by maximizing. March and Simon (1958) challenged that assumption. Jones (2003, p. 395) argued that comprehensive rationality does not offer satisfactory scientific predictability and that bounded rationality is a superior mechanism. “Bounded rationality emerged as a critique of fully rational decision making” (Jones, 2003, p. 397).

In his article, “A Behavioral Model of Rational Choice” (1955, p. 99), Hebert Simon challenged the concept of rational choice used in economics – “an economic man is also a rational man who has ‘knowledge of relevant aspects of his environment.” Simon criticizes the simplification of the rational choice concept. The author argued that other factors enter the equation to determine an individual’s choice and some of these factors are related to human behavior as for instance, psychological limitations or the computational capacity of an individual. It is possible that in the policy arena, decision-makers look for a

‘satisficing,’ rather than an optimal or maximizing alternative to a policy issue.

Charles Perrow (1972) summarized the implications of the bounded rationality on decision-makers:

“Given the limits on rationality, what does the individual in fact do when confronted with a choice or situation? He constructs a simplified model of the situation. This "definition of the situation," as sociologists call it, is built out of past experience (it includes prejudices and stereotypes) and highly particularized, selective views of present stimuli. Most of his responses are “routine"; he invokes solutions he has used before. Sometimes he must engage in problem solving.

When he does so, he conducts a limited search for alternatives along familiar and well-worn paths, selecting the first satisfactory one that comes along. He does not examine all possible alternatives nor does he keep searching for the optimum one.

He "satisfices" instead of "optimizes." That is, he selects the first satisfactory solution rather than search for the optimum. His very standards for satisfactory solutions are part of the definition of the situation. They go up and down with positive and negative experience. As solutions are easier to find, the standards are raised; as they are harder to find, the standards fall” (p.149).

In summary, the concept of bounded rationality is used in this context as a tool to better understand how political intentions are forged and molded. Bounded rationality highlights that political intentions are continuously being expressed and policy decisions that emerge from those intentions are always emerging to solve problems according to established routines. Bounded rationality emphasizes that there are unpredictable events and other factors that bound individuals who intend to make rational choices. Thus, decision-making does not always entail a linear and sound process because the conditions under which decision-makers work and what they actually do play a role in policy-making.

The policy implication is that bounded rationality predicts policy outcomes.