Rationality, Bounded

Limitations on Decision Making

One important type of limitation on actors is problems of attention. Decision makers have problems related to time and capabilities. They have too many decision signals to attend to from internal and external sources; too many tasks to work with; too many strategies, plans, and policies to attend to; and too many contacts to cope with. And some information and decision-making premises are not ready available, so they have to search for them. Therefore, how they allocate their scarce resources is a critical factor. They are often part-time participants in many decision-making processes because they move around between decision opportunities depending on what is brought to their attention. And when they focus on some problems, solutions, and decisions, they have to defocus on others because of limited capacity. All these limitations indicate that decision theories should be centered more on theories of attention and search than on theories of choice among readily available goals, preferences, alternatives, and consequences.

Another set of limitations concerns problems of memory. Both individuals and organizations may [Page 2213]have problems in storing and retrieving information. Individuals may forget or may have problems of capacity concerning keeping records of actions and experiences, or their memories may be distorted. Organizations may have problems in systematically collecting information, interpreting and storing it, and retrieving information or making it fully available throughout the organization because of lack of capacity and competence or organizational barriers.

A third set of limitations is problems of comprehension. Individual actors and organizations may have problems of capacity concerning aggregating, organizing, using, and inferring from information. It's therefore often difficult to learn from history about the relationships between actors and events, not to mention predicting further development. The information may be there, but actors may fail to put it together in a comprehensive way. The more complex the society and the organizations themselves, the more prevalent such problems will be. Actors may also compete in defining and learning from history, partly because they have experiences from different parts of an organization or see their experiences through different lenses of norms and values—for example, related to higher education and professions. There may also be some wishful thinking or superstitious learning going on. Actors may think that what happened had to happen or that all good things in their organization are related to their own actions and all bad things to the actions of other actors.

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