172 7: Decision Th eory
theoretical advancement in decision theory. Th e work of Richard Th aler and
Amos Tversky with Nobel Laureate Daniel Kahneman in the fi eld of behavioral
economics has signifi cantly and fundamentally changed the tenets of decision
theory; the challenge for public administration scholars is to apply such changes
to individual behavior within organizations.
Rationality
Rationality is still a central concept in decision theory, but modern conceptions
of rationality account for key variations in describing and understanding ratio-
nality. Although rationality has many meanings (sane, intelligent, calculating),
in decision theory rationality is more narrowly defi ned “as a particular and very
familiar class of procedures for making choices” (March 1994, 2). Th is includes
a rationality of process, usually called procedural rationality, which links choices
to preferred outcomes, usually called substantive rationality. As we discuss later
in the chapter and in Chapter 8 on rational choice theory, recent advances in
decision theory suggest that this link is oft en disrupted or more malleable than
originally postulated.
Two distinct patterns of rational logic also appear in decision theory. Both
are based on Simon’s initial logical-positivist means-ends description of ratio-
nal decisionmaking, but they defi ne ends diff erently. One is the rational decision
logic of consequences; the other, the rational decision logic of appropriateness. In
the former, rational decisions are consequential because actions based on those
choices anticipate preferred future consequences, results, or ends. Th e rational
logic of consequences is most compatible with Simon’s early conceptions of de-
cision theory and with substantive rationality (Simon 1947/1997, 1960; March
and Simon 1993). Th e decision logic of consequences is more suited to modeling,
cost-benefi t analysis, performance measurement, risk analysis, and quantitative
methodologies. Decision theorists coming from the perspective of the logic of
consequences tend to be associated with economics and political science. Th e
modeling of Th omas H. Hammond and Jack H. Knott (1999) illustrates the deci-
sion logic of consequences.
Th e rational logic of appropriateness is much less connected to Simon. De-
cisions are thought to be appropriate when choices are based on shared under-
standings of the decision situation, the nature or “identity” of the organization,
and accepted rules of what is expected in particular situations. Th e rational
logic of appropriateness tends to emphasize procedural rationality. Th e deci-
sion logic of appropriateness is more suited to institutional analysis, historical
analysis, contingency theory, population ecology, case analysis, and narrative-
deductive methodologies. Decision theorists working from the appropriateness
perspective are likely to be associated with sociology, organization theory, and
social psychology. Public administration has excellent contemporary examples
of both perspectives. Th e research of Todd R. LaPorte and Paula M. Consolini