184 7: Decision Th eory
Much of the decision-theoretic research using the logic of appropriateness deals
with how organizations and the individuals in them cope, and especially how they
cope with individual and institutional rules and identities given the dynamic en-
vironments in which institutions are embedded (Th ompson 1967; Harmon and
Mayer 1986). Th is is the study of institutional change and decisionmaking pat-
terns of mediation between institutions and their environments.
Decision patterns of institutional change are history-dependent adaptations.
Th is is the process of constructing a usable history, one that involves a mixture of
experiences carried along in institutional narratives and stories, and the selective
exploitation of particular institutional successes and failures (Bellow and Minow
1996). Individual identities and organizational identities and rules refl ect this us-
able history and understand present rules to be residuals of this history. Th e pro-
cesses of history-dependent adaptation involve forms of the collective imagining
of a preferred future, imagining taking the form of strategic planning, visioning
exercises, the aspirations of leaders, long-range budgeting, and so forth. Th is is an
intentional process of capturing institutional preferences and desires and setting
out to achieve them. In the decision logic of consequences, this process is the result
of the preferences of decisionmakers and calculations of the likely future conse-
quences of action. In the decision logic of appropriateness, decisionmakers create
history-based rules as instruments of control, construct history-based identities
and expectations of behavior, identify an attractive future, and go about enacting
that future. Th is is understood to be not just a process by which the institution
adapts to its environment, but also a process by which the institution and the en-
vironment adapt to each other. Th is process involves analysis, bargaining, patterns
of imitation, and trial-and-error experiences of institutional learning (Schram and
Neisser 1997).
March and Olsen (1995) describe an institutional learning cycle involving the
selective recollection and interpretation of experiences (the usable history), un-
derstandings of the rules and identities derived from these experiences, interpre-
tations of the nature of previous institutional actions and their consequences, and
the adaptation of rules and identities based on these interpretations. Th is can be
a noisy iterative process of competing institutional interpretations of its past and
estimates of the consequences of previous actions and what the institution learned.
Institutions may learn poorly because of misinterpretation of history, imperfect
memory, and, above all, attribution of historical successes to eff ectiveness while
discounting the infl uence of good fortune. Cycles of institutional learning, embod-
ied in changing patterns of rules and identities, describe the processes by which
institutions adapt to their environments and environments adapt to institutions.
Ambiguity, Uncertainty, and the Logic of Appropriateness
Easily the most interesting and provocative part of decision theory based on
the logic of appropriateness is the treatment of the concepts of uncertainty and