V185- Management Pub Problems and Solutions Exam 2

Rational actor

A person who can rank-order preferences by expected utility, has stable and transitive preferences, analyzes all alternatives with perfect information, and selects the option that maximizes utility

Characteristic of rational actors: rank-order preferences

Can rank-order preferences based on the expected utility of each option

Characteristic of rational actors: stable and transitive preferences

Rank-ordered preferences are stable and transitive

Characteristic of rational actors: perfect information

Analyze all possible alternatives and know which will work best

Characteristic of rational actors: maximize utility

Select the alternative that maximizes utility

Rational Choice / Public Choice

The application of economic assumptions about rationality and self-interest to the study of political behavior

Traditional economic theory assumption

People are rational actors; many studies in economics, political science, public policy, and public administration reflect this view

Why rationality? (normative)

Consistent with normative ideals about how decisions should be made

Why rationality? (models)

Allows formal mathematical and statistical models to predict human behavior

Why rationality? (institutions)

Can design institutions, rules, and incentives that push rational actors toward desirable collective outcomes

Bounded (intended) rationality

Concept developed by Herbert Simon in response to problems with the comprehensively rational model

Bounded rationality: capacity

People do not have the capacity to be perfectly rational

Bounded rationality: limits

People are rational within certain limits; they try to make the best decisions they can but often fall short of pure rationality

Bounded rationality: predictable failures

The ways people fail to be rational are repeatable and predictable, not random

Herbert Simon

Developed the concept of bounded (intended) rationality

Two modes of thinking

System 1 and System 2

System 2

Who we typically think "we" are, so we assume it's in charge most of the time; too slow and resource intensive to use all the time

Dominance of System 1

The vast majority of our decisions happen via System 1, which usually reacts the way we would want it to

Why System 2 isn't always used

It is too slow and resource intensive to employ all the time

System 1 mistakes

Intuition can be misleading and emotions can bias us, leading to decisions that work against our best interests

System 2 and System 1 errors

System 2 is often not aware that System 1 made a mistake, so we repeat errors without realizing it or devising strategies to avoid them

Heuristic

A rule or method that works like a mental shortcut, helping make decisions faster than considering all the information; akin to a "rule of thumb"

Heuristics: benefits

Often work as desired, saving time and energy and arriving at the correct conclusion

Heuristics: drawbacks

In some cases they can result in faulty decisions

Availability heuristic (bias)

Disproportionately relying on information that quickly comes to mind to make judgments or decisions about the future

Availability heuristic: what comes to mind easily

Recency; media coverage; conversations with friends or family; things that elicit a strong emotional reaction because they are extreme

Availability bias: effect

Can cause overestimation or underestimation of the likelihood of an event when easily recalled information is not representative of all available information

Satisficing

Rather than making the best decision possible, people make decisions that are "good enough"

Satisficing: status quo

People often only consider small changes from the status quo

Satisficing: fewer choices

Reducing the number of choices saves time and energy and makes decision-making more manageable

Satisficing: minimal threshold

Achieving some minimal threshold may be all that really matters

Satisficing: downside

Lose out on the potential of maximizing utility

Prospect theory

Theory that in reality people approach outcomes relative to a reference point (the status quo) rather than simply maximizing wealth or utility

Rational actor models vs. prospect theory

Rational actor models assume people maximize wealth or utility; prospect theory says people judge outcomes relative to a reference point (the status quo)

Reference point

The status quo, which people use to evaluate outcomes

Cognitive biases (critical thinking)

Reference dependence and loss aversion

Negativity bias

The tendency of citizens, government officials, and the media to focus disproportionately on and punish underperformance much more severely than they reward logically equivalent over-achievement

Framing example

"10% of clients were dissatisfied" generates more negative assessments than "90% of clients were satisfied"

Negativity bias: public managers and leaders

Spend more time and resources improving perceived problems than maintaining areas of strength

Negativity bias: media

Coverage of government agencies and programs often highlights failures but rarely reports on successes

Motivated reasoning

Making or evaluating arguments in a way that promotes a preferred position rather than an objective search for truth

Confirmation bias

Seeking out information that supports our existing opinions and ignoring or discounting information that challenges our beliefs

Why are we motivated reasoners? (intelligence)

It is not related to intelligence or knowledge

Why are we motivated reasoners? (emotion)

It is emotionally painful to change our minds or admit we were wrong

Why are we motivated reasoners? (social)

The importance of social connections and standing within a group often outweighs the desire to get the "right" answer

Organizations are composed of human beings

Hard to think about an organization without thinking about its individual people; the basic cognitive limitations individuals have are likely to show up in organizations too

Organizations vs. individual preferences

Organizations are not simply aggregations of individual preferences and concerns

Individual vs. group behavior

People behave differently alone than in social and organizational settings; group dynamics and interpersonal interactions can produce different decisions than individuals would make alone

Science of Muddling Through

Charles Lindblom's argument that the "rational-comprehensive" model of policymaking is unrealistic

Charles Lindblom

Claimed the rational-comprehensive model of policymaking was unrealistic; associated with "The Science of Muddling Through" and incrementalism

Lindblom's reasons rational-comprehensive model is unrealistic

Policymakers have difficulty defining precise goals and values; goals may not be fully compatible; uncertainty dominates most decisions; the policy selected may not be the most effective means to the desired end

Incrementalism

Policymaking characterized by a series of decisions, each instituting modest change

Incrementalism: type of argument

Both an empirical and a normative argument

Incrementalism: benefits

Less risk in many cases; consistent with principles of bounded rationality; politically expedient

Incrementalism: evidence

Lots of evidence that budgets tend to be largely incremental; less work looking at other kinds of decisions

Incrementalism: limitation

A good start but ultimately limited in explaining policymaking; it can't explain major changes, which rarely occur but are often of considerable importance

How major change happens

Change happens incrementally most of the time, but major change happens when the attention of key decision-makers becomes focused on a single issue or problem

Limits on attention

Restrict the number of issues or problems that decision-makers can attend to at any given time

Parallel processing

Dealing with several decisions (problems) simultaneously (in parallel)

Serial processing

Dealing with problems or decisions one at a time

Humans and parallel processing

Humans are not capable of parallel processing

How organizations overcome cognitive limitations

Design of federal bureaucracies, the committee system in Congress, etc. divides responsibilities into narrow policy domains, allowing task specialization; at the organizational or system level, parallel processing can occur

Limits of organizational parallel processing

Capacity is not infinite; some key actor (President, agency leader, member of Congress, Supreme Court Justice) must eventually make a final decision and is constrained to serial processing

Agenda setting as political

Deciding which issues to pay attention to, and which aspects of issues are most salient, is a highly political process

Jones & Baumgartner quote on information and attention

"Information is plentiful in politics." "Attention is a scarce good; directing attention at one problem means ignoring others." (The Politics of Attention, 2005)

Bryan D. Jones & Frank R. Baumgartner

Authors of The Politics of Attention (2005); associated with punctuated equilibrium theory and the idea that attention is scarce

Punctuated equilibrium

Policymaking as a system with long periods of relative stability and incrementalism, followed by brief periods of rapid change

Punctuations (what causes them)

Focusing events or reframing of a problem by issue advocates cause attention to shift to new issues or new aspects of issues

Disproportionate information processing

Results in a policymaking system that often pays too little attention to a problem for a long time until it reaches a breaking point, at which time attention shifts and the system becomes focused on the issue

Focusing event

An event that causes attention to be focused on new issues or new aspects of issues, leading to a punctuation

Drive to be liked (conformity)

Humans have a strong drive to be liked and positively viewed by peers; we want to fit in with those around us

Conformity: positive side

People pick up and emulate desirable behaviors seen in others (role models)

Conformity: destructive side

Peer pressure can cause people to do things they would not do on their own

Groupthink

When group members striving for agreement (norm for unanimity) fail to realistically appraise alternative courses of action

Groupthink: dissenting opinions

Pressure to conform makes people uncomfortable sharing dissenting opinions

Groupthink: masks disagreement

Masks disagreement or uncertainty within the group

Groupthink: belonging over correctness

Desire to remain part of the group is more powerful than making the right decision

Groupthink: extreme outcomes

Can lead to extreme and unethical decisions and actions

Preventing groupthink: brainstorm

Brainstorm before discussing course of action

Preventing groupthink: leaders

People in power positions (leaders) should refrain from expressing early opinions

Preventing groupthink: devil's advocate

Encourage members to raise objections and concerns (challenge norms)

Preventing groupthink: diversity

Foster diversity in group membership (backgrounds, education/training, viewpoints)

Isomorphism

Over time, organizations within a field or sector converge to look alike, particularly in structure and policies/procedures

Mimetic isomorphism

Imitating high-performing peers or competitors even if you don't know how, why, or if the things you are copying matter for performance; often driven by uncertainty

Normative isomorphism

Professional standards and networks cause organizations to adopt similar practices and structures

Coercive isomorphism

Government policies and regulations pressure organizations to become more alike in order to comply with legal requirements