Revisiting the Logic of Consequences 179
decisionmakers and second, the tendency to overestimate the salience of experi-
ences based on stable environments.
Risk in decision theory is a function of the infl uence of uncertainty on ratio-
nality. Decision rationality is bounded by uncertainty regarding the consequences
of present actions, and even greater uncertainty regarding the possible future
consequences of possible future decisions. To accommodate the uncertainty of
consequences when taking risk into account, decisionmakers tend to evaluate
both the expected value of preferred consequences (will productivity be improved
sharply or just a little by this risk?) and the degree of uncertainty involved (is this
risk slight or great?). Decisions, then, are determined by these estimates and by
the individual or organizational propensities to be risk averse or risk prone. Es-
timations of risk for the purpose of reducing uncertainty depend on perceptions
of the context, assumptions regarding knowledge, and attempts to control the
context of institutions (MacCrimmon and Wehrung 1986).
Uncertainty, and therefore risk, varies by the level of predictability in an in-
stitution’s context. In settings in which decisionmakers have experience, they do
rather well in predicting risk and in guiding institutions through unpredictable
circumstances (March 1994, 37). Outside the range of their experiences, how-
ever, decisionmakers may deny uncertainty and underestimate the probability
that rare or unexpected events will occur. If they are lucky, events will keep within
the range of their experiences. But as Kahneman (2011) and Sunstein (2013)
show, people are generally bad at assigning probabilities to risk, particularly to
low-probability, high-salient events, such as an act of terrorism or another out-
break of Ebola (following the African outbreak in the spring and summer of
2014). Vivid images can redirect attention despite no change in actual probabili-
ties of the event occurring.
Decisionmakers also tend to imagine greater control over the context of their
institutions than they actually have, and they fail to imagine the possible eff ect
of factors over which they have no control (see, for example, Taleb 2010). When
things go well and decisionmakers are successful, they tend to imagine it is be-
cause of their skill and leadership rather than luck, chance, or a friendly institu-
tional context. As Kahneman (2011) shows, people will oft en overpay to eliminate
small risks (317).
Uncertainties and decision risk associated with a turbulent context can be re-
duced by attempts to control that context. Systems of co-optation reduce uncer-
tainty and risk (Selznick 1949). Partnerships and contracts, when coupled with
contract deadlines and performance guarantees, may not reduce decision risk,
but do broaden or spread the responsibility of risk.
Organizations use internal controls, procedures, and red tape to attempt to
reduce risks and deal with uncertainty (Bozeman 2000). For example, some busi-
nesses and organizations routinely overcomply with governmental regulation to
lower the risks of possible investigations and negative publicity (DeHart-Davis
and Bozeman 2001). Overcompliance rationality is diffi cult to explain in terms