174 7: Decision Th eory
constrained by limited cognitive capacity, incomplete information, and unclear
linkages between decisions and outcomes. Others have shown that boundedly ra-
tional decisionmaking has led to the development of useful heuristics for making
decisions in constrained environments, resulting in “good” decisions (Gigerenzer
and Todd, 1999). Decision theorists working from the appropriateness perspec-
tive tend to focus heavily on the usually obvious points that not all alternatives
can be known and considered, not all preferences or values can be reconciled,
and not all alternatives can be considered. Instead of seeing the individual or the
organization as intendedly rational, they emphasize Simon’s “satisfi cing” concept
that, rather than fi nding the best course of action, decisionmakers usually search
for actions that are good enough. Th ey somehow muddle through, to borrow
from Lindblom.
Depending on the logic of decision theory, rationality is diff erently bounded.
We return to the two primary decision theory perspectives, the logic of conse-
quences and the logic of appropriateness, to describe diff ering understandings of
the limits and bounds of rationality.
Irrationality, or Nonrational^2
At the time of the fi rst edition of this text, modern decision theory was mostly
about the limits and bounds of decision rationality. Rational choice theorists
inclined toward pure decision theory conceived of individuals and organiza-
tions as, in eff ect, seeking to make rational decisions but falling short because
of specifi c limits that made fully rational decisionmaking diffi cult for humans.
Th eorists of bounded rationality, then, were driven in large part by the need
to explain decisions or choices that deviated from rational choice theory, and
within the decision theory framework such deviations were explained as being
the result of environmental and cognitive constraints.
Contemporary decisionmaking research, however, has begun to step further
and further from the foundations of rational choice. Rather than comparing ac-
tual decisions to the baseline of fully rational decisionmaking, empirical research
has increasingly tackled head-on widely demonstrated patterns of decisionmak-
ing that are examples not just of humans falling short of perfect rationality, but
of humans being perversely and consistently irrational. Amos Tversky and Daniel
Kahneman’s (1974) pioneering work laid the foundation for an increased interest
in theorizing about alternatives to rational choice theory. A central issue high-
lighted by Tversky and Kahneman was the descriptive nature of bounded rational-
ity; it could not predict decisionmaking, only describe post hoc how (and perhaps
why) a decision deviated from a purely rational baseline. While largely accepting
bounded rationality’s notion of decisionmaking limits (be they cognitive, envi-
ronmental, or informationally incomplete), Tversky and Kahneman showed that
human decisionmaking can actually be highly predictive. Th ey demonstrated that
decisionmaking is consistently biased by certain environmental conditions or