Decision theory

A venue is: Examples of venues:

"a decision setting that offers the best prospects for reaching one's policy goals" · Governmental institutions o Legislature o Executive agencies o Courts o Levels of government (local, state, national, international) · The marketplace

A distinction:

* Agenda setting and priming is about whether we think about an issue - or not. Whether we think about something is determined by accessibility, so media makes it accessible. * Framing is about how we think about an issue. "Applicability", connection with other issue/topic/problem (c.f. Kingdon on coupling)

Venue shopping can be rational and a deliberate process, or:

* It can also be an experimental process (learning). Venues serving organizational needs and identities, thinking about what kind of group are we/do we want to be (c.f. March on formation of preferences). * There can also be an interplay between venue and issue formulation, where choosing a particular venue affects the formation of the issue (as problem/solution). Illustration in empirical case of Pralle.

Allocation of responsibility

* Responsibility allocated to individuals who affect events by freely choosing and carrying out one of several possible actions * Leadership in organizations as being a lot about being responsible - and taking the blow.

What is Venue shopping? (Palle)

* The activities of advocacy groups and policymakers who seek out a decision setting where they can air their grievances with current policy and present alternative policy proposals * Venue shopping is about attempting to shift venues (e.g. to side-step policy elites that are in favour of the status quo) or to find a venue where rules of access and participation favour a proposal like yours.

Critical of the critique of the standard rational model of DM. E.g. March, Brunsson, and other researchers focusing on how decisions are 'actually' made in practice (Laroche) Draws on the concept of Social Representations:

*"Modes of practical thinking oriented towards communication, understanding, and the mastering of the social, material and ideal environment" * Managers see themselves as decision-makers because making "decisions" is a way of being an actor in the world of organizations

CRISIS RESPONSE COMMUNICATION

*Linear (rational) crisis response communication: Triggering event --> Observation --> Interpretation --> Choice (Decision about action) --> Dissemination (Implementation of communication) * Sprial · Several iterations · Overlapping steps

Two guesses in rational models of decision-making

1. About future consequences (what are the consequences of particular actions/ alternatives?) 2. About future preferences (what will we think of those consequences? Theories of choice under ambiguity/conflict)

Problematizing "implementation problems". Baier asks why "implementation problems" arise, and are implementation problems always problematic - or can they also be sensible? Baier is critical of three common ideas regarding the causes of implementation problems:

1. Due to "bureaucratic incompetence" a. Fault rests with the incompetent administration/actors on lower levels in the hierarchy, who are the ones to implement policy (within a "top-down" approach) b. --> Educate! 2. Due to conflicts of interest a. Between agents and their principals, "people serve other interests than those of the organization" b. --> Improve governance systems! 3. Naïvité of policy makers. a. Problematic policies; fuzzy, ambiguous --> Clearer and more consistent goals!

Main characteristics of a group (Frey)

1. Norms (shared expectations, predictability) 2. Cohesion ("the sum of all forces that increase group attractiveness") 3. Role differentiation (roles in hierarchy, appropriate behaviour stemming from role)

Three forms of problem management in Garbage Can decision-making:

1. Resolution a. Problem finds solution - and is solved (c.f. standard view of decision making) 2. Oversight a. Decision is made - but problem remains. E.g. decision without noticing problem 3. Flight a. Problem gets linked to another Garbage Can b. (+) previous can may be rid of problem c. (-) problem still exists in other part of organization

Collective efficacy

A collective belief about the group's ability to successfully perform some task

What is a crisis? (Weick)

A crisis is not a given. Some people may consider something to be a crisis, whilst other doesn't. How people interpret/respond to an event affects the outcome/if a crisis will happen or not. This indicates that crisis events are more controllable than you first think.

What is groupthink?

A theory about the phenomenon that even very smart people may end up making very bad - irrational - decisions in a group setting. High risk for bad decisions!

He argued that decision-making as rational problem solving was a too limited view (Brunsson) DM is not only about "choice", also about:

Allocation of responsibility Mobilization of organizational action Legitimation

Strategic DM and implementation

Brunsson, Laroche, Cabantous, Baier, Sahlin-Andersson, Markóczy, Cohen

Exchange cohesiveness for... (Whyte)

Collective efficacy

How the actor manage crises are characterised by:

Expectations · On what is important (and not); e.g. what units, processes, people etc. · On cause-effect relationships; what, usually, happens if we do x · Or of e.g. "a decision" (c.f. Laroche); to be made by top management when crisis strikes Commitment · To company strategy · Department · Profession ... · "The dark side of commitment is that it produces blind spots" Capacity · Available expertise and resources; internally, in network o C.f. discussions of individual and collective efficacy (Whyte). · "people see those events they they feel they have the capacity to do something about"

The Evolution of Three Media Effects Models (Scheufele)

Framing, Agenda Setting, and Priming

Group DM

Frey Whyte Manias

Crisis DM

Hale, Weick, Rosenthal

Framing in the media

How an issue is characterized in news reports can have an influence on how it is understood by its audiences. · As a macro level construct (media) o (Deliberately) Used by journalists o Reduce complextity o News (issue) selling · A micro level construct (individual) o Compare Kahneman on framing; importance of context for how we think about issues (20% of population will be saved if we follow option X vs. 80% of the population will die if we follow option X)

S1 vs S2

Intuition vs reasoning

Lobbying and political DM

Kingdon, Palle, Scheufele

Individual DM

March, Kahneman

Agenda setting in the media

Setting the agenda for what mass audiences find important. "The idea that there is a strong correlation between the emphasis that mass media place on certain issues (e.g. based on relative placement or amount of coverage) and the importance attributed to these by mass audiences."

The accessibility dimension

experienced decision makers working under pressure rarely needs to choose between options, because only a single option comes to mind. ABC 121314. The ease with which mental contents come to mind, attributes that are routinely and automatically produced by the perceptual system or by System 1 without intention or effort.

Framing

how options are presented affects the outcome of decisions. "The basic principle of framing is the passive acceptance of the formulation given" (the advantage of designating an option as the default one!)

Legitimation

o Decisions as independent instruments of legitimation o Highlighting that decisions can be considered outputs of organizations o Hypocricy - a means to keep more constituents satisfied. § An actor might decide in accordance with one set of demands and act in accordance with another set of demands § "Decoupling" often defined as the gap between organizational structures and practices § Everything that is decided upon cannot/isn't meant to be carried out in practice. "Implementation problems" rather than implementation problems

Mobilization of organizational action

o There is no self-evident link between "a decision" and what organizational action follows in practice. o A need to ensure/create favourable conditions for collective action in organizations, including dealing with uncertainty. o Uncertainty as something to be dealt with to enable action. In other words, by making a decision, a leader expresses commitment, and a committed leader makes it easier for others to expect action and become motivated. o Reduce uncertainty by making use of irrationality § Adapting preferences to alternatives (reducing preferences) § Having few alternatives - or even just one. § No greed for data (less is more ...) o Highlights trade-off between "Decision rationality" and "Action rationality" o Drivers of collective action; motivation, expectations and commitment

Decisions functioning to:

provide identity, provide meaning, help organise and provide hope · "Decisions" provide identity for actors (managers), e.g. help constitute leaders and followers · 'Decisions' attach meaning to activities, make sense of "messy" organizational life. · "Decisions" as self-fulfilling prophecies (c.f. Brunsson on decisions and mobilization of action) · "Decisions" as useful illusions o "Decisions" allow participants to "act a priori, to get into the course of action. They do not need things to really happen the way they think they should, but they need to think they will." o Enable continuity, organise the flow of action

Positive Aspects of Ambiguous Policies:

· Accommodate diverging/conflicting interests (that, in real life, are often present). Makes it possible to support same policy for different reasons. · Encourages administrative autonomy, with adaptation to different contexts and needs, resulting in "loose-coupling". Which may not always/for everyone be a "problem" (c.f. Brunsson on hypocrisy) Ambiguity may be something of a solution, and implementation problems are not always that problematic - if one can live with less (perceived) control.

Priming

· Changes in the standards that people use to make political evaluations. · Occurs when news' content suggest to news' audiences. That they ought to use specific issues as benchmarks for evaluating the performance of leaders and governments. · An extension of agenda setting; what is important now - according to the media · Memory based models o What comes easily to mind (c.f. System1) o Attention as a scarce resource (c.f. GC model) o Importance of salience/accessibility (c.f. Kahneman)

Traditionally the relationship between degree of consensus and organisational performance has been implied, i.e. the more the better. Markóczy presents an alternative view, not only degree of consensus, but also:

· Content: What is agreed about? o Diverse set of possibilities; goals & values, means-ends relationships, procedures, appropriate actions, frames · Scope: How wide-spread is consensus in the organization? o At top only? Immersed throughout? · Locus: Where is consensus primarily located? o The empirical study showed that it is important that functional areas are positive to change at early stage of strategic change - not in top management teams! o Incremental diffusion throughout organisation o Implies a different perspective on implementation; "sideways" and "bottom-up" as viable alternative directions in addition to the traditional "top-down".

Where is the garbage in the model?

· Garbage: Problems and solutions · Garbage Can: Choice situations (meetings) · Garbage collectors (and producers): participants/decision makers

Sources of groupthink

· Group cohesiveness · Structural organizational faults · Provocative situational contexts

Groupthink remedies

· Group leader acting as impartial co-ordinator (of knowledge, evaluation of alternatives ...) · Systematic strengthening of minority members (seeking their point of view) · Bringing in external experts (multiple departments, other forms of knowledge) Creation of independent sub-groups (parallel problem solving)

The standard model of rational decision making vs alternative model

· Has Preferences (Goals, aims, identity) · Does an Information search (Available alternatives (cost, quality, location ...)) · Evaluate alternatives (In relation to preferences) · Makes a Choice (Of alternative that fits preferences best) · Takes Action Alternative forms of decision making · Intentionality/rationality: "The individual in charge of her own destiny" · Imitation: When in doubt, do as others do! · Learning: Experimentation · Rule-following: E.g. applying the "Logic of Appropriateness" (Who am I and what is my role? What is somebody like me supposed to do in a situation like this?)

Symptoms of groupthink

· Illusion of Invulnerability o Can cope with everything! E.g. early Kennedy administration - "Bay of Pigs" · Illusion of Morality o What we do is the right thing to do! · Rationalisation in the face of negative feedback o "This was really to be expected, because ..." o 'Ex-post rationalisation' of choices in order to feel good about a decision that was made. If we start thinking about all other possible options that we could have chosen we might question whether we really picked the best one. o E.g. help consumer avoid "cognitive dissonance" in post-purchase behaviour by sending them a mail confirming that buying this particular brand was the right thing to do. · Stereotyping of opposing groups o Aim to make in-group, and yourself, look good by casting the out-group as bad o E.g. through use of new yardstick; measure character rather than performance in the face of defeat in a competition · Self-censorship o Better not raise or even listen to that little voice inside you that may disagree ... · Illusion of Unanimity o Similar preferences among members, results in no conflicts · Conformity seeking o Direct pressure on dissidents, at hint of divergent preferences, conflict etc. · Reliance on self-appointed mind guards o E.g. assumption that silence equals approval

These processual aspects promote "Implementation problems":

· Increased risk that people will be disappointed at what (little) can be achieved in practice. Framing promotes sense of "failure", and Kahneman on importance of reference point. · Erosion of support - commitment for action is lowered. As we know action does not automatically follow decisions, and all "supporters" may not even have been interested in action in the first place.

The use/merit of ambiguity, instead of the traditional view of ambiguity as problematic in decision processes and blamed for "planning disasters" in projects (Sahlin-Andersson) Ambiguity can be useful in "projects as organising" (and not in projects as organisation, which mirrors the traditional view). Projects as organising:

· Many actors with diversity of relationships · The project as an arena: several co-existing objectives and activities, e.g. solve problem, develop knowledge, have fun · Gradual framing and stabilisation: over time change scope, focus and identity of project. · Emphasis on process rather than outcomes

The Positive Side of Bureau-Politics

· May put crisis and crisis management to the test o Evaluation and reconsideration of roles · May prevent single mindedness - and groupthink o Recognition of, legitimate, differences of views o Seeing more things, enables doing more things (c.f Weick) · Forwarding of open strategies of crisis management o Transparency, rather than closure of decision arena o Easier public scrutiny - more accountable? o Better decisions?

The interdependence between knowledge and decision making (Manias) Modes of managing/resolving conflicting knowledge in decision making:

· Mediation o Compromise; mix of several sources o Integration, e.g. use of cross-functional team in R&D · Invoke Hierarchy o Centralisation - or decentralisation (make it somebody else's problem), e.g. "The Nurse as Visible Go-Between" · Calibration o Using a common standard (common denominator), e.g. Grades (F-A) or Accounting standards o "The Doctor Nurse Game" § Making use of the institutionalised role of "the docile nurse" (using "the logic of appropriateness" decision model)

Alternative wisdom of bureau-politics

· No one actor has overriding influence, nor access to all relevant knowledge, resources, contacts ... (compare Manias & Street on knowledge and DM) · Many actors in the policy making arena o Blurring of roles/activities between politicians and administration (compare importance of "invisible" actors, and "policy entreprenuers" in Kingdon) · Divergent and conflicting interests among actors o Inter service rivalry o Importance of "being there"; identity/brand reputation, and post-crisis resource (re)allocation · Decisions are inherently compromises o Choices between "equally defensible outcomes" o From intra to inter-organizational decision making; lack/imbalance of experience among affected parties, e.g. crisis orientated agencies vs. local branches · Decision outcomes tend not to anticipate requirements of effective implementation o Information overload, time pressure --> flaws in monitoring o Iterative rather than linear processes of decision making and implementation (c.f. Hale et al)

Baier's alternative view of implementation problems: An understanding of implementation cannot be divorced from an understanding of the processes that generate decisions. Need for understanding the process:

· No pre-existing consensus; no exogeneously shared preferences · Negotiations; "over-selling" to gain support.

Key problems with each step

· Observation: Lack of information, uncertain information · Interpretation: Conflicting interpretations of crisis events · Choice (of what to decide and do): Lack of time to evaluate, bad communication filters (too much/too little info) · Dissemination (implementation): Conflict of resource demand: Decide vs. Communicate. Poorly designed messages for intended audiences.

Prospect theory

· Perception as reference dependent (we perceive the attributes of an object in "a context of prior and concurrent stimuli") o In domain for gains we become risk averse (tendency to play it safe to keep acquired wealth) o In domain for losses we become risk seeking (tendency to gamble to win back losses! Financial crisis) · Bernoulli's error: based on the assumption that states of wealth have a specified utility. Decision makers will maximise the expected utility. o No reference value!

Negative decision framing

· Prospect polarisation: Groupthink is furthered "when groups faced with important decisions frame their decisions as choices between losses". --> Risk seeking - preference for risk increases in group and among individuals

Takes off on the issue of decision theory as constitutive. How come rationality keeps reemerging? In spite of all the theorizing on DM in organizations underscoring its limitations and problems to use it in practice? (Cabantou) Rational DM as performative praxis: A set of activities whereby organizational actors collectively produce rational decisions and thus grant social reality to rational choice theory.

· Rationality Conventionalization o Turning rational DM into a social norm, to follow RM becomes "the right thing to do". E.g. through Business School education. · Rationality Engineering o Helping managers overcome their limited cognitive capacities, so that we eventually get more of "S2" o Through providing material that incorporates rational DM, e.g. decision-support systems, specialized software. · Rationality Commodification o Commodification = turning ideas, subjects etc. into commodities to be sold o Here; selling and showcasing the "best practice" of rationality by diffusing it through market forces (e.g. consultants)

Prescriptive vs descriptive assumptions, taste is found to be

· Relative: liked and disliked (e.g. immoral preferences) · Irrelevant: preferences de-coupled from action, choices made regardless of preferences · Changing: over time. Future preferences hard to predict. · Inconsistent: conflicting and/or irreconcilable · Ambiguous: Difficult or impossible to specify · Endogenous: affected by choices and actions. Output rather than input.

An alternative view; organizations as "a collection of choices looking for problems, issues and feelings looking for decision situations in which they might be aired, solutions looking for issues to which they might be the answer, and decision makers looking for work." "The garbage can model" (Cohen et. al.). Organisations are:

· Sees organisation as organised anarchies, with problematic preferences (ambiguity, endogeneity), unclear technology (cause-effect relationship) and fluid participation (changing boundaries). * Have streams of choices, problems, solutions and participants

Advantages of ambiguity in decision-making:

· Strengthen commitment o "Unclearly presented ideas encourage the recipients to fill in the vagueness with his or her own expectations" · Weaken opposition o More difficult to react against ambiguous proposal o Postponement of opposition until it is made specific · --> Original ideas force critics to react within the boundaries of the new frame n (c.f. Kahneman on Framing)

Factors that affect Garbage-Can decision making:

· Timing: Good, bad, right... (What streams present at particular point in time ...) · Load on the system: Attention as scarce resource · Serendipity (chance and coincidence)

Conventional wisdom of bureau-politics: (Rosenthal)

· Unanimity (diversity of interests put aside) · Centralisation · Concentration of power and authority · Pre-conditions for "Constitutional dictatorship" · Comprehensive, integrative ... management · Presumes separation between those who decide (elected politicians, parliament) and those who implement (bureaucrats, agencies)

Different types of crises (Hale)

· Victim o Crises caused by others, external event, you(r organization) are/is innocent! o Examples: Natural disasters, terrorist attacks · Culprit o Intentional - decided to do the wrong thing o Organizational misdeeds, knowingly placing stakeholders at risk, you(r organization) is the cause of the crisis! C.f. Brunsson on allocation of responsibility through DM o E.g. Bankers in Financial Crisis · Accidental o A by-product of other activities, you(r organization) was involved in causing it, but it was unintentional o Examples: Product recalls, Industrial accidents (sometimes)