QUESTION: What is decision-making? Contrast the comprehensive-rational Decision-making Model and the Bounded- rationality (satisficing) Decision-making Model. Which of the two models best explains decision-making processes in the Zambian public service? Give reasons for your answer. Word limit 2500 - 3000 words.
SUGGESTED ANSWER BELOW
Decision-making is the series of mental and physical steps taken in overcoming a challenge. The Comprehensive Rationality Decision Making Model and the Bounded Rationality Decision Making Model offer two possible logical ways of solving problems.
Comprehensive rational decision-making theory offers linear (successive) steps meant to lead to optimisation of benefits. The bounded rational decision-making model makes a modified rational process aiming at bringing realism into problem-solving. Its purpose is to arrive not at optimised benefits but simply a satisfactory outcome. The bounded rationality model in practice lessens the amount of information-evaluation proposed by comprehensive rationality theory.
The two decision-making models enriched the field of administration and in particular gave a better understanding of what may or may not work well in decision-making. Administrators who have studied the two models probably have to choose which to apply and to what degree.
Rationality – to be measured, examining available material before making conclusions.
Comprehensiverational decision-making – the decision-making in which decision-makers list and make full evaluation of facts and figures for and against.
Bounded rationality decision-making model – a rational decision-making model in which there is less emphasis on full evaluation of available material.
INTRODUCTION
A decision is the choice made by the decision-maker, from a number of alternatives, to address some challenge in a specific situation. Decision-making is a problem-solving process which ends when an answer is found - normally from among a range of possible solutions. What is common in these two definitions is that decision-making involves selection of what to do.
Decisions are made in public administration, politics, business, social situations and indeed in an endless list of other professions and circumstances.
The basic decision-making process has the four main stages of identification of goals, option generation, evaluation and choice, and follow-up and execution.
In this essay, we contrast the comprehensive-rational Decision-making Model and the Bounded Rationality (satisficing) Decision-making Model. We also attempt to explain which model is more in line with the decision-making process in Zambia.
DEFINITIONS IN DECISION-MAKING:
1. Rationality.
2. Comprehensive-rational decision-making model.
3. Bounded-rational decision-making model.
1. Rationality
We start by explaining the word ‘rationality’. Rationality is reasoning that seeks to maximise the benefits, as dictated by the means available. Thus, the rational actor strives to avoid judgement based on emotion and arbitrariness. It may therefore be safely said that the rational actor attempts to make decisions and moves based on understanding why it is important to take one particular decision instead of another. For example, the rational actor will attempt to examine and understand facts and figures before deciding whether to buy a horse or a car as his/her daily means of transport. The principle of rationality has been used for a long time in economics in efforts to explain consumer choice.
1. The Comprehensive Rational Decision-Making Model.
Comprehensive rationality suggests that leaders seek to convert their vision to policy, supported by organisations which operate in a sensible and impartial manner. Accordingly, the Comprehensive Rational Decision-Making Process was conceived to have the following steps:
i. Identifying values and objectives/goals to be achieved.
ii. Listing and assessing all the different ways the objectives/goals can be achieved.
iii. Determining how appropriate each of the listed objectives is.
iv. Comparing the benefits of each option with its costs.
v. Picking the option that maximises achievement of values and objectives and goals.
vi. Execution.
vii. Feedback.
The bounded rationality decision-making model seeks ‘sufficiency’ rather than ‘maximising’. Specifically, the model is based on:
· The view that individuals and organisations cannot maximise their utility (degree of satisfaction); they instead are able to find a point that is ‘good enough’ or ‘satisfices’, and
· The reasoning that decision-makers do not have the means or the desire to consider absolutely all factors before deciding what course of action to take; they have to use the simple 'rule of thumb' (which is really a combination of rules and common sense) – focusing on the factors most relevant and making a decision.
To find decisions that satisfice, decision-makers should be free thinkers. They must be able to process information well and use the most appropriate rule of thumb to ensure they are most effective.
Some organisations are large and complex. Decision-making that considers every relevant fact can be really time-consuming and tiresome. Decision-making could be impracticable. So, the rule of thumb is supposed to help a decision-maker decide with relative ease.
CONTRASTS BETWEEN THE COMPREHENSIVERATIONALDECISION-MAKING PROCESS AND THE BOUNDED RATIONALITY MODEL
1. One difference is that the comprehensive rationality model assumes that the decision-making process is linear (moves from one clearly-defined stage to another) in a sequential fashion. The bounded rationality model recognises that decision-making may not always move that way, especially in very big organisations.
However, it still goes to the credit of the comprehensive rationality model that there is, at least, some formal approach to decision-making.
2. While the comprehensive rationality model is about examining all relevant available facts and figures, the bounded rationality model embraces the impracticality of evaluating vast amounts of data and proposes minimisation of material to examine. It proposes that it is necessary to start out with only some key facts to consider, unlike in the comprehensive rationality model. It can also not be presumed that an individual or organisation will be able to generate the many alternatives that may require discussing in some cases.
Indeed, even the bounded rationality model does not dismiss rationality - the examination of facts available. It only proposes minimising their examination.
3. The comprehensive model seeks listing of values and objectives in order of importance. By not suggesting that approach, the bounded rationality model appears to recognise the fact that sometimes, the objectives can be difficult to list in order of importance.
4. The two models are both rational, but with a difference. It is 'absolute rationality' that is not embraced by the bounded rationality model. Mere rationality itself is not a problem.
5. The comprehensive rationality decision-making model assumes that all the information that will be needed will be there, accurate, reachable and not expensive. In actual fact, information can be scarce, inaccurate, unreachable and too expensive. The bounded rationality model acknowledges that decision-making is limited by how much relevant information the decision-maker can get.
6. Comprehensive rationality aims at decisions that ‘maximise’gains – the highest possible benefit out of the alternative chosen. Bounded rationality treats maximum benefit as impracticable, and therefore seeks to only ‘satisfice’. In bounded rationality, therefore, it is enough if a decision is ‘satisfactory’.
7. The comprehensive model makes the assumption that decision-makers will have the capacity and resources to do evaluation of alternatives in a technical way. This is not so, in real life. For example, a decision-maker may not know the evaluation criteria. Decision-makers are likely to have only sufficient knowledge to have a fair idea of benefits and consequences.
Decision makers both on the streets and in the boardroom often have competence handicaps and choose what is good enough (whether in shops buying shoes or in the boardroom discussing who to promote to a vacant position). Bounded rationality recognises the fact that decision-makers are not always technically competent.
8. There are times when it is necessary to act in advance when one has a mere idea of the dangers of not doing so. For example, many countries and regions went on lockdown after the breaking out of the Coronavirus. While some countries may certainly have done a comprehensive analysis of the various alternative courses of action, many appear to have simply used the ‘good enough’ idea they had of the effects of Covid-19 afflicting their communities and locked down. The contrast here is that bounded rationality – unlike comprehensive rationality - advises openness of mind and pragmatic practice.
9. Another contrast is that there are factors (such as ethics, feelings, loyalty, respect) that cannot be measured but are still very important. There seems no room for them in the comprehensive rationality model which argues that relevant factors must be identified and measured against consequences. That is, if a factor cannot be measured, it may have to be left out, and not be considered (even if it is an important factor to consider). On the other hand, the openness of mind encouraged in the bounded rationality model suggests that there is room for non-quantifiable factors.
WHICH MODEL BETTER DESCRIBES THE ZAMBIAN DECISION-MAKING PROCESS?
Both the comprehensive rational decision-making approach and the bounded rationality philosophy are evident in Zambia. Which of the two models best describes the decision-making process in Zambian public service, however, seems to depend on the type of public sector entity being looked at. We expand this statement under two sub-headings:
In the Zambian public sector, including the legislature and civil service institutions, decision-making appears to strongly be in the line of comprehensive rationality. The reasons are:
- Government procedure in decision-making is clearly spelt out in writing and must always be followed to the book. Decisions always have to follow the procedure of providing information for evaluation before approval is given. That is a characteristic of comprehensive rational decision-making.
- There is linearity in the way government ministries and departments make decisions. This is exhibited in the award process of contacts by the Zambia Public Procurement Authority ZPPA). Linearity is also shown in the way the national assembly operates. For example, laws start as bills which have to go through four sequential steps namely first reading, second reading, third reading and eventually being signed by the republican President before they become statutes.
- It is possible to see assumptions associated with comprehensive rational decision-making. An example is the apparent assumption that there will be enough time for all the required procedure. There obviously is also the assumption that by being so procedural, the outcome will be the maximised utility.
In many ways, it is understandable using the comprehensive rational decision-making model in government institutions. They are normally very large and complex and if procedure were not rigid, it would increase the incidence of vices such as employing unqualified personnel and awarding undeserved business.
In quasi-government businesses (parastatals), there is some departure from the rigid system of procedure. For example, people can be dismissed more easily and at the local level than in the totally government sector. It is not so in the pure government sector. Firing a junior civil servant in remote Mbala (for instance) can require the involvement of very senior officers (normally the Permanent Secretary) in the capital city. Because of being slightly more autonomous and being in business, parastatal businesses enjoy a bit more flexibility in procedure. Overall, parastatal businesses suffer from many of the limitations (comprehensive rational decision-making burdens) as the pure government sector. This is because they operate within policy set by government and must achieve government objectives (not profit objectives) at the end of the day.
The formulation of the Comprehensive Rational Decision Making process, notwithstanding the weaknesses of the model, gave the world of administrators a crucial first step in how to go about solving problems. Being an initial step, it was bound to have imperfections. Other important theories such as Maslow’s Hierarchy of Needs, have also been found to have weaknesses (for example, it has been proven that one need does not have to be completely satisfied for a new, higher need to emerge).
When the Bounded Rational Decision Making process was proposed, it benefited from the existence of the comprehensive model evidenced by the fact that its proponents frequently refer to the comprehensive model in their writing.
In fact, in many ways, the bounded rational theory was a strengthening of the comprehensive model out of appreciating the theory. If the comprehensive model had not been appreciated, the bounded rationality theory could have been made totally different.
And so, it could probably be stated that both the comprehensive and rational model of making decisions and the bounded and rational approach were attempts not to compete; they were attempts to solve a common enemy of mankind which was apparently insufficient decision-making tools. They each have validity.
