214 8: Rational Choice Th eory and Irrational Behavior
expertise to become involved in deciding what policies to pursue and how to pur-
sue them. (2) Important decisions are opened up to all members of a community
and their elected representatives. (3) Power is broadly diff used, not concentrated
in a dominant center. (4) Administrative functionaries are public servants, not a
technocratic elite of “public masters.” Under these conditions, a democratic ad-
ministration will be concentrated by polycentric government—one with multiple
power centers in multiple layers (Ostrom 1973, 65–86).
Following Weber, public administration as a discipline rejected the concept
of a democratic administration as theoretically and empirically untenable. Dem-
ocratic administration placed unrealistically high knowledge and participation
demands on citizens, and in diff using power also weakened accountability over
public agencies. Accordingly, public administration cast its intellectual lot with
Wilson’s assumption that power needs to be concentrated if it is to be controlled,
and that effi cient administration is more likely to come from technical experts
functionally organized into bureaucracies than from multiple, contradictory, and
poorly informed signals from the masses. Ostrom responded to this reasoning
by arguing that its intellectual props had already crashed down. Such scholars as
Dwight Waldo (1948) and Herbert Simon (1947/1997) had bored so thoroughly
into the Wilsonian assumptions (especially the public-administration dichot-
omy) that they were simply incapable of supporting the orthodox perspective.
Th us, Ostrom argued, public administration was left in a volatile and dangerous
position: Its intellectual rudder ripped away, it was drift ing and in danger of be-
ing consumed by other disciplines.
Ostrom argued that rational choice could not only provide an intellectual life-
boat but also provide the discipline with its theoretical ship of state. Ostrom sug-
gested that a democratic theory of administration along the lines considered and
dismissed by Weber is, in fact, possible, and that rational choice provides the ob-
vious means to achieve it. If markets can effi ciently match supply and demand for
private goods and services with little in the way of centralized power centers or
jurisdictional consolidation, why can they not do the same for public goods and
services? Aft er all, we have little diffi culty in presuming that those who buy cars
and soft drinks are informed enough to match their purchases to their preferences.
Similarly, we expect consumers to know enough to abandon producers who fail
to satisfy those preferences, thus allowing the market to weed out those who are
ineffi cient or fail to respond to consumer demand. Why are these minimal as-
sumptions about information and individual behavior not transferable to public
services? Although not using the terms common to microeconomists, the writ-
ings of James Madison and Alexander Hamilton in the Federalist embraced the
notion of individual determinism, and their conception of divided power fi t with
the polycentric nature of democratic administration. As Buchanan and Tullock
put it, “Madisonian theory, either that which is explicitly contained in Madison’s
writings or that which is embodied in the American constitutional system, may be
compared with the normative theory that emerges from the economic approach”