Th e Evolution of Decision Th eory 171
concept, on the other (Simon 2000). Decisions made under conditions of the ra-
tional conserving effi ciency concept will be guided by preferences for institutional
order, stability, predictability, and survival (Kaufman 1991; Smith 1988). Because
the public institutional environment may be volatile, survival may depend on ad-
aptations based on estimates of the need to change patterns of order, stability, and
predictability. Public institutions that do not survive make the wrong guesses and
their resources dry up. Public institutions that do survive routinely search for the
balance between order and adaptation, a kind of institutional natural selection
(Kaufman 1991). Th is understanding of decision-theoretic rational conserving ef-
fi ciency, although generally descriptive of public-sector decision behavior, deem-
phasizes the shared values of decisionmakers and their collective commitments to
organizational purposes.
In its rudimentary form, rational decision theory sought to (1) clarify and put
in priority order organizational values and objectives; (2) consider the available
alternative or alternatives that might achieve those objectives; and (3) analyze
alternatives to fi nd the alternative or group of alternatives most likely to achieve
preferred objectives. In its most simplifi ed form, rational decision theory de-
scribes goal-oriented behavior.
Rational decision theory was challenged early on because it was considered
unrealistic and out of touch with actual patterns of organizational decisionmak-
ing. Rather than make rational choices, organizations “muddle through” by mak-
ing small incremental decisions that are based on mixed-together means and
ends; that are made with limited knowledge, limited analytic capabilities, and
limited time; and that are less likely to involve big risks (Lindblom 1959, 1965,
1979). Th ese challenges were a characterization of Simon’s claims because his
initial decision theory anticipated the limits of rationality and described them.
Nevertheless, the scientifi c and systematic study of decision rationality, however
limited, was key to understanding public administration. So, by the late 1950s, the
stage was set for the transition from decision theory based on rationality to deci-
sion theory based on bounded rationality. Although bounded rationality would
dominate the fi eld of decision theory until the early 1990s, as we discuss in the
Conclusions and Summary, a third stage based on near total abandonment of
rationality has come to dominate the fi eld.
Th e Evolution of Decision Th eory
From this description of the origins of decision theory, we fast-forward more
than half a century for a consideration of contemporary decision theory and the
logic of rationality. Since the 1990s, there has been a growing movement, backed
largely by experimental research, to defi ne how decisions are bounded, not by
cognitive or environmental constraints, but instead by patterns or biases in in-
dividual information processing. As we discuss in the Conclusions, the notion
of bounded rationality as an alternative to pure rationality potentially prevents