SUBJECT: Urban Governance and Management
TOPIC: Introduction to Theories of Decision Making and Rational
And incremental Theory
Submitted to:
Mrs.Tuhina Mam,
Submitted by:
B. Rohith(16011BA004)
B. Kavitha(16011BA005)
B. Gowthami(16011BA006)
Decision-Making:
In Public Administration:
The decision-making as a process of administration has a wide range of application mainly in
public administration and at the beginning of the fifties of last century it came to the limelight.
Behind this the work of a celebrity of public administration was active and he was H. A. Simon.
His renowned work—Administrative Behaviour; A Study of Decision-Making Process in
Administrative Organisation was published in 1948.
Herbert Simon divided the concept into two main parts—one is decision— being arrived at and
process of action. Mere making of decision is not enough and therefore its implementation. So
both these sections are interconnected and impor-tant. Herbert Simon once said: a theory of
administration should be concerned with the processes of decision as well as the processes of
action. Simon pointed out that for the proper management of an organisation a policy of
comprehensive in nature is required to be adopted.
Definition:
1.“Decision-making is usually defined as a process or sequence of activities involving stages of
problem recognition, search for information, definition of alternatives and the selection of an
actor of one from two or more alternatives consistent with the ranked preferences”.
2.Decision making theory is a theory of how rational individuals should behave under risk and
uncertainty. It uses a set of axioms about how rational individuals behave which has been
widely challenged on both empirical and theoretical ground.
SO,
we can say that decision-making denotes the formulation of general policy for the
management of an organisation which may be business organisation or admin-istrative
organisation. The point to note is that the nature and implementation of decision-making may
be different in both places but it remains that in every case the importance of decision-making
remains intact. To sum up, the decision-making means the adoption and application of
rational choice for the management of private, business or governmental organisation in an
efficient manner.
Various models of decision-making:
Rational model ,Bounded rationality and satisficing ,Incrementalist approach Organisational
procedures view ,Political model ,Garbage Can model ,Individual Differences perspective
Recognition-Primed Decision Model
Multiple perspectives approach .
RATIONAL THEORY
The rational manager view assumes a rational and completely informed decision-maker
(“economic man”) as described by neoclassical microeconomic theory around the middle of
the previous century. The process of rational decision-making comprises a number of steps,
such as those given by Simon (1977):
• Intelligence: finding occasions for making a decision;
• Design: inventing, developing and analysing possible courses of action;
• Choice: selecting a particular course of action from those available; and
• Review: assessing past choices.
In classical or perfect rationality, methods of decision analysis are used to attach numerical
values or utilities to each of the alternatives during the “choice” phase. The alternative with
the highest utility (or maximum subjective expected utility) is selected. When using the
rational model in this fashion, it is assumed that managers.
• “know of all possible alternatives;
• know the consequences of implementing each alternative;
• have a well organised set of preferences for these consequences; and
• have the computational ability to compare consequences and to determine which is
preferred.”
THE BOUNDED RATIONAL DECISION-MAKING MODEL: A REALISTIC APPROACH
The Rational Decision-Making Model, amongst its many assumptions assumes that
there is a single, best solution that will maximize the desired outcomes.
Now, the bounded rationality model says that the problems and the decisions are to be reduced
to such a level that they will be understood. In other words, the model suggests that we should
interpret information and extract essential features and then within these boundaries we take
a rational decision.
The model turns towards compromising on the decision-making process though it is a
structured decision-making model. The decision maker takes the decision or is assumed to
choose a solution though not a perfect solution but “good enough” solution based on the
limited capacity of the group leader to handle the complexity of the situation, ambiguity and
information. The steps involved in the decision making are alike to the rational decision-
making process the model assumes that the perfect knowledge about all the alternatives are
not possible for a human being to know. Hence, based on the limited knowledge he takes a
good enough knowledge though not a perfect decision.
In rational process the assumption is that the exact problem, all the alternatives, should be
thoroughly known to the decision maker.
However, the realistic approach of human limitation is overlooked in rational decision making,
but the same approach is considered mainly in the bounded rational decision-making process.
Hence, it is also called as a Realistic Approach for Rational Decision-Making Process.
Origin of the INCREMENTAL THEORY
Beginning in the late 1950s and early 1960s, critiques of the rational paradigm began to
emerge and formed into several different schools of planning thought. The first of these
schools is Lindblom’s incrementalism. Lindblom proposed it as a conservative, market-
oriented alternative to the Rational Comprehensive Planning Model (RCPM).
● Incremental planning is the most widely noted alternative model to comprehensive
rational planning.
● Charles Lindblom wrote the famous ‘Muddling through’ (1959). This title refers to the
core of this planning model: Planning is considered less a scientific technique that
follows concrete steps; rather it is a mixture of intuition and experience in reality.
● This planning model describes the real everyday life in a planning office rather than the
comprehensive rational model.
Main characteristics of incremental theory:
⮚ Perceives planning as the “science of muddling through”: making decisions on day-to-
day basis and focusing on marginal, incremental improvements over the status quoted.
⮚ Analysis carried out without the advance determination of goals. Instead, it calls for
simultaneous selection of goals and policies.
⮚ Consideration of a few alternatives that are marginally different from the status quotes:
⮚ Simplified, limited comparisons among the few alternatives
⮚ Modest complexity and comprehensiveness of data collection, analysis and forecasting
⮚ No long-range (long-term) goals or vision
⮚ Agreement among decision-makers (not elaborate scientific analysis) as the main
ingredient for policy (plan) adoption.
⮚ Flexibility: decisions can easily be changed (modified or abandoned) if they later turn
out to be inappropriate.
● Lindblom described his model as partisan mutual adjustment and disjointed
incrementalism.
Critique of incremental planning:
Decisions are taken by consent among partisans without a society-wide regulatory centre
and guiding institutions.
Decisions made under the Incrementalist model would reflect the interests of the most
powerful:
• ‘Partisans’ have varying power positions
• Interests of the underprivileged and politically unorganized (an important partisan
group) would invariably be underrepresented.
• Focusing on short term and seeking marginal improvements over the status quo does
not encourage societal innovations.
Following this model can lead to a planning process that is either:
• Circular (leading us back to where we started) or
• Dispersed (leading us in many directions at once but taking us nowhere).
Incremental theory approach in the city Hyderabad:
First of all, For incrementalism to work properly, at least two conditions have to be met. All or
almost all affected interests must be represented in the policy, and there must be no major
imbalances in power among the various participants. Therefore, the incremental planning is
not effective in the city Hyderabad.
Incremental planning deals with development of the city with increments like in this year x
amount of development and in the next year x+1 amount of development, like that we should
plan for small developmental activities. If we want the city to be developed, we should start
with small portion area later that can be replaceable to other areas.
Ex: Delhi has spread over a large area, so they divided the city into three municipal corporation
for smoothly ruling purposes. In the same way, Hyderabad can be divided.
