Bounded Rationality, Satisficing, Artificial Intelligence, and Decision‐Making in Public Organizations: The Contributions of Herbert Simon

• Published date: 01 September 2022
• Author: Gary Schwarz,Tom Christensen,Xufeng Zhu
• Date: 01 September 2022
• DOI: http://doi.org/10.1111/puar.13540

902This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Guest Editorial

In honor of the 75th anniversary of the publication

of Herbert Simon’s seminal book Administrative

Behavior: A Study of Decision-Making Processes in

Administrative Organizations, first published in 1947,

PAR held a special symposium (Simon1997). The

Royal Swedish Academy of Sciences, which awarded

Herbert Simon the Nobel Prize in Economics in

1978, considered Administrative Behavior to be

“epoch-making.” The book has a special relationship

with PAR, as two of its chapters appeared in PAR

prior to its publication (Simon1944, 1946).

Moreover, when PAR selected its half-century’s “Great

Books” in public administration for its own 50th

anniversary, Administrative Behavior was selected as

the overwhelming winner by a panel of 20 experts

(Sherwood1990). The recent resurgence in interest in

the behavioral sciences in public administration has

reintroduced the book to a new audience (Battaglio

and Hall2019).

Administrative Behavior places decision-making at

the center of analysis and examines how individuals

make decisions within certain organizational frames or

contexts. Whereas standard economic theory assumed

that individuals are perfectly rational decision makers,

Simon emphasized the limits to rationality that real-

life administrators—such as the employees in the

municipal governments that he observed first-hand

in projects for the International City Management

Association—face with regard to memory, attention,

and capacity (Augier and March2001; Rainey2001).

To this end, he developed a theory of bounded

rationality (Simon1955), according to which

individuals satisfice (an amalgamation of the words

satisfy and suffice) rather than maximize because

they cannot evaluate all potential alternatives and

their consequences due to their limited cognitive and

information-processing abilities, time constraints, and

incomplete knowledge (Simon1956). Thus, rather

than considering all relevant factors and alternatives

to make optimal decisions, individuals are portrayed

as limiting their search and focusing on only a few

options to make decisions that are “good enough”

to meet their aspiration levels. Simon’s concepts of

bounded rationality and satisficing heavily influenced

classic public administration work on the “science

of muddling through” (Lindblom1959) and on the

budgeting process (Wildavsky1964).

Simon’s oeuvre is unique for its combination of

insights from social psychology and structural

theory. He suggested that the formal structure of

organizations channels the thoughts and actions

of actors, that is, they are not free to pursue self-

interests but are parts of a collective endeavor

to achieve organizational goals (Egeberg2014).

As a result of structural design, the actors are

assigned specific roles, and the formal structure

helps in modifying their cognitive limitations.

Simon challenged the notion of the single decision

maker and demonstrated how organizations

influence individual decision-making by, for

example, developing decision premises, assigning

roles, and establishing operating procedures

and communication mechanisms (March and

Olsen1983). Simon cautioned that too much

identification with an organizational sub-unit

may lead to decisions inconsistent with larger

organizational purposes and may necessitate the

centralization of decision-making (Miao et al.2019).

Arguing that organizations can attenuate limits to

human rationality and nudge boundedly rational

individuals to make better choices (Thaler and

Sunstein2008), Administrative Behavior is widely

considered to be a foundation of the burgeoning

behavioral public administration literature that

emphasizes the importance of the behavioral sciences

in the study of public organizations (Battaglio etal.

2019; Grimmelikhuijsen et al.2017). Simon was

oneof the first to suggest closer integration of the

study of public administration and psychology. He

believed that such interaction would be mutually

beneficial as both sides have much to offer to each

other, resulting in more rigorous, higher-quality

research (Olsen2015; Simon1955).

Gary Schwarz

Queen Mary University of London

Public Administration Review,

Vol. 82, Iss. 5, pp. 902–904. © 2022 The

Authors. Public Administration Review

published by Wiley Periodicals LLC on behalf

of American Society for Public Administration.

DOI:10.1111/puar.13540.

Bounded Rationality, Satisficing, Artificial Intelligence, and

Decision-Making in Public Organizations: The Contributions

of Herbert Simon

Tom Christensen

Xufeng Zhu

University of Oslo

Tsinghua University