Rational behavior and administration

The social sciences suffer from acute schizophrenia in their treatment of rationality. At one extreme, economists attribute to economic man a preposterously omniscient rationality. Economic man has a complete and consistent system of preferences that allows him always to choose among the alternatives open to him; he is always completely aware of what these alternatives are; there are no limits on the complexity of the computations he can perform in order to determine which alternatives are best; probability calculations are neither frightening nor mysterious to him. Within the past generations, in its extension to competitive game situations (e.g., game theory) and to decision-making under uncertainty ( e.g., rational expectations), this body of theory has reached a state of Thomistic refinement that has a great intellectual and esthetic appeal but little discernible relation to the actual or possible behavior of flesh-and-blood human beings.

At the other extreme are those tendencies in social psychology, many traceable to Freud, that try to reduce all cognition to affect. Thus, we show that coins look larger to poor children than to rich,11 that the pressures of a social group can persuade people they see spots that are not there, 12 that the process of group problem-solving involves accumulating and discharging tensions, 13 and so on. The past generations of behavioral scientists have been busy, following Freud, showing that people are not nearly as rational as they thought they were. Perhaps the next generation will have to show that they are far more rational than we now describe them as being— but with a rationality less grandiose than that proclaimed by economists.

This schizophrenia is reflected in Chapters IV and V. The former chapter undertakes to clarify the concept of rationality as it has been developed in economics and formal decision theory. The latter chapter discusses the boundaries that man’s limited cognitive capabilities place on the exercise of rationality. Hence it is Chapter V and not Chapter IV that describes rationality as we should expect actually to see it in real life. Readers who have just finished Chapter IV must suspend judgment, until they have read its companion chapter, about the shape that rationality takes in administrative decision-making.

To anyone who has observed organizations, it seems obvious enough that human behavior in them is, if not wholly rational, at least in good part intendedly so. Much behavior in organizations is, or seems to be, task- oriented—and often efficacious in attaining its goals. Hence, if we are to give a psychological account of human behavior in organizations, our theory must have room in it for rational behavior. It seems equally apparent that the rationality exhibited in organizations has none of the global omniscience that is attributed to economic man. Hence, we cannot simply chuck psychology overboard and place the theory of organization on an economic foundation. Indeed—as will become increasingly evident— it is precisely in the real world where human behavior is intendedly rational, but only boundedly so, that there is room for a genuine theory of organization and administration.

Finally, to assert that behavior in organizations is boundedly rational does not imply that the behavior is always directed toward realizing the organization’s goals. Individuals also strive rationally to advance their own personal goals, which may not be wholly concordant with organizational goals, and often even run counter to them. Moreover, individuals and groups in organizations often strive for power to realize their own goals and their own views of what the organization should be. To understand organizations, we must include all of these forms and objectives of rationality in our picture. We must include human selfishness and struggles for power.

When we speak of people behaving irrationally what we generally mean is that their goals are not our goals, or that they are acting on the basis of invalid or incomplete information, or that they are ignoring future consequences of their actions, or that their emotions are clouding inexplicable. The nature of this intended and bounded rationality will be the main topic of Chapter V and its commentary.

Source: Simon Herbert A. (1997), Administrative Behavior, Free Press; Subsequent edition.

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