KYT102U-INTRODUCTION TO PUBLIC ADMINISTRATION
Chapter 4: Decision-Making in Government
Introduction
Decision-making is a complex and challenging process. It requires us to gather lots of information and overcome significant amounts of uncertainty.
This chapter summarizes the context, stages, critical factors, and theoretical approaches to decision-making in the public sector.
The Context of Decision-Making
Decision-making processes within the context of the rational-man (homo-economicus) tradition are overwhelmingly calculative and objective-based. This type of consequentialist reasoning is the basis for most, if not all, social and behavioral sciences. Human actions are perceived as the consequence of various choices shaped by motivations, hopes, and wants. However, as will be shown later in this chapter, it may need to be corrected to assume that all individual or organizational decision-making is rational. In other words, irrational elements can also be found in the decision-making process. It would be helpful to focus on the different dimensions of the decision-making process to understand the context better.
Dimensions of Decision-Making
Simon claimed that the various dimensions of decision- making function in organizations include all organizational processes, such as planning and implementation. Deciding means choosing one among several options to implement it. Therefore, it is challenging to separate the decision-making process from the planning and implementation phases.
Since decision-making is a process focused on acquiring and using information, the relationship between those who produce information (for example, research centers in universities, as well as research units in government agencies, non-governmental organizations, and think tanks) and those who use that information, that is, political and administrative decision-makers, is also of great importance. Both groups may get frustrated and disappointed many times during the decision-making process. Those who produce the information may complain that the data they produce need to be considered more in the decision-making process and those who use information in their decisions may argue that the information they need lacks in terms of quality and quantity. Other researchers, on the other hand, draw attention to the importance of the language used in the transmission of information, and emphasize the danger that the transmitted information may be distorted if those who produce the information and those who consume it as decision-makers speak different languages.
It can not be emphasized enough how important the power relations between public policy actors are in the production, distribution, and use of information in the decision-making process information that goes against the general policy of the ministry.
Stages And Critical Factors in The Decision- Making Process
In order to understand the decision-making process, it is necessary to be knowledgeable about the stages that decision-makers go through.
Stages of Decision-Making
The decision-making process has at least five stages: The first is diagnosing and clearly stating the problem or opportunity. The second step is collecting data about the problem or opportunity. The third step is to reach a decision regarding the situation under consideration and implement that decision. The fourth and fifth/final stages are to implement and evaluate the implementation of the decision.
Critical Factors in the Decision-Making Process
One of the most critical factors in decision-making is understanding how urgent it is to make that decision. Good decision-makers solve urgent problems first after assessing the urgency of the problems. They do not rush for applying a solution and delay decision-making if no particular solution presents itself.
The second stage of the decision-making process is collecting data about the problem to be solved or evaluating the opportunity. This allows the decision-maker to draw a framework for the decision through data collection.
Another concept that should be considered when making decisions is opportunity cost. This concept describes other missed opportunities when a specific decision is being implemented. In other words, opportunity cost is the second-best use of the resources used for implementing a decision.
Another vital factor to consider while decision-making is the quality and quantity of the people and institutions with which the decision-maker consults.
The destructive or constructive power and frequency of crises are also very effective in decision-making.
The fourth (implementing the decision) and the fifth (evaluating the decision) steps of decision-making will not be covered in this chapter. They are topics that deserve separate chapters, if not books by themselves.
Theoretical Approaches to Decision-Making
Rational Decision-Making
The first theoretical approach in the field of decision- making can be categorized as the comprehensive rational model of decision-making. This model is based on several assumptions: The first assumption is that rational individuals make decisions based only on logic and they are not affected by other factors such as emotions, intuitions, and experience. The second assumption is that decision- makers have all the information about the issue or problem they are deciding on. The third assumption is that all outcomes of decisions are predictable. The fourth and final
assumption is that all these assumptions and features about decision-making have a universal character.
The rational decision-making model faces two fundamental problems. The first one can be called the “value problem.” The decision maker, in the government context, a bureaucrat, needs help in determining a set of goals that are desired to be achieved by the decision. Achieving all of these goals simultaneously is almost impossible because different goals are related to different and sometimes incompatible values.
The second fundamental problem of the rational decision- making model is the “complexity problem.” Complexity is inherent both in life and in the administrative system itself. It is also inherent in information processing and mental capacities of individuals.
Bargaining Decision-Making
A second look at the decision-making process can be expressed as the “bargaining approach.” In this approach, instead of or in addition to the rationality objective of the first approach, the aim is to increase political support for the decision since the decision-making process includes actions such as conflict, bargaining, and persuasion between individuals and groups.
A decision-making model compatible with this approach is categorized as incremental. In this model, previous decisions determine subsequent decisions because they are based on the previous decisions by developing them within the margins without too much modification. While the rational approach is generally identified with economics and economists in the decision-making literature, the incremental/additive model is generally adopted by political science and political scientists.
The bargaining model of decision-making draws attention to the shortcomings of rational decision-making. Such limitations are also embodied in Herbert Simon’s concept of bounded rationality. Simon replaced the idea of “economic man” with “administrative man.” The administrative man wants to maximize his interests but does not always know exactly what these interests are. He is aware of only a few, but not all, of the possible solutions to the problem under consideration. In the end, the decision to be made may not be the best one (optimizing), but a good enough one under these circumstances (satisficing).
Participatory Approach to Decision-Making
A third approach to the decision-making process is the “participatory approach,” which aims to increase the level of participation of those affected by the decision. This participation may be the participation of many different groups, such as the employees or the clients of the organization, groups or institutions regulated by the organization, the general population, or some specific groups, such as taxpayers or voters.
An essential problem with participation in decision-making is that although some individuals and groups are unwilling
(or may be unable) to make a concrete contribution to the idea generation and decision-making processes when they are among the contributing stakeholders. This phenomenon is called social loafing in social psychology literature, “the tendency for people to relax when they are in the presence of others, and their performance cannot be evaluated.”
Another interesting question regarding the participatory decision-making approach is the degree of consensus and divergence among the participants. In extreme cases, there are pressures to reach a consensus in group decisions, called “groupthink” in the literature.
Decision-Making with Public Choice Theory
Another theoretical approach that criticizes the wide- ranging rational decision-making model is the “rational choice” or “public choice theory” (public/ rational choice theory). It is sometimes named “principal-agent theory” as well.
According to this model, public administrators, like other people, want to maximize their interests. Therefore, they act in a way that reduces risk and maximize benefits for their careers when making decisions.
This creates a dilemma since the rational decisions of a group of persons (in this case, bureaucrats) in effect cause non-optimal use of resources for the society at large. When all bureaucrats act in this self-serving and interest- maximizing manner, the growing administrative apparatus loses its effectiveness and becomes less and less observant of the public interest.
The proposed solutions for the problems presented by the public choice theory are twofold: If it is difficult, if not outright impossible, to control the “empire-building” reflexes of the bureaucrats, it is advised to decrease the size of the bureaucracy by privatization. The second solution is to limit the decision-making as well as discretionary powers of the bureaucrats by setting up control mechanisms such as rules of conduct.
Decision-Making with the Garbage Can Model
Cohen, March, and Olsen, who introduced the idea of decision-making with the garbage can model, examined the decision-making environments, especially in universities, and identified the decision-making processes where inconsistent and ill-defined preferences, uncertain technologies and fluid participation prevail as “organized anarchies.”
According to the Garbage Can Model, organizational environments are somewhat chaotic. Rather than problems seeking solutions to themselves, solutions are seeking a problem to match itself with. Some decision-makers are looking to match a particular solution to a specific problem. All this ambiguity transforms organizations into a “garbage can” in which organizational participants and other actors throw ideas, problems, and goals. Consequently, a wide range of solutions can emerge from this mixture that accumulates in the garbage.
The garbage can model describes the decision-making process as a chaotic environment, an organized anarchy where short and long-term preferences are unclear. Organizational members dump various ideas, solutions, and problems into a garbage can, the inside of which is messy. However, this model also presents opportunities to match solutions with problems and vice versa. More importantly, the garbage can model of decision-making argues that even if an organization has ambiguous goals, it lacks a precise definition of the problem to be solved, clear preferences of decision-makers, and chaotic processes, there are still mechanisms by which decisions can be made.
Decision-Making with Prospect Theory
Another theory that claims to explain the decision-making process is the “prospect theory.” According to this theory, individuals sometimes do not act rationally when making decisions but do so systematically, according to specific rules, and not haphazardly.
Within this context, irrational decision-making is argued to be about how the expectations from the results of the decisions are presented in a framework: Expectations are seen as positive and negative deviations from the existing situation (status quo). When the deviation is positive, individuals are less tolerant of risk. When the deviation is negative, the tolerance for risk increases. For example, high risks (i.e., choosing new and less-tried treatments for an illness) may be taken to reduce the risk of death in decisions taken from the framework of “risk of death” (adverse deviation) in a patient’s treatment process; Generally, high risks are not taken in decisions taken from the framework of “chance to live” (positive deviation).
The assumptions of the prospect theory can be adapted to decision-making in public policy analysis. For instance, in policies to minimize domestic violence, the assumptions work as follows: If the framework of risk is presented as “being subjected to violence” and “being killed,” both of which are negative deviations from the existing situation (not experiencing violence), what will be the risk-oriented behaviors of decision makers? The more negative the divergence, the greater the tolerance for risk, and the riskier political solutions to adopt will be observed, such as forced confinement and electronic handcuffs.
The work of Tversky & Kahneman paved the way for the establishment and development of behavioral economics as well as behavioral public policies. Especially central is the concept of nudging, the use of behavioral sciences such as psychology, economics, and neuroscience to analyze human behavior and decision-making systematically. Nudging aims at designing and implementing better, more flexible public policies via behavioral interventions.