Decision-making Models - Rationality

Rationality

Since the time of public administration has developed, scholars assume that people make decisions rationally. By rationality, Herbert A. Simon (1976) means ”a style of behaviour that is appropriate to the achievement of given goals, within the limits imposed by given conditions and constraints” (P. 405). Max Weber, in the early part of the 20th century, suggested distinguishing two types of economic rationality: formal rationality and substantive rationality. The "formal rationality of economic action" referred to "the extent of quantitative calculation or accounting which is technically possible and . . . actually applied." "Substantive rationality" referred to the degree to which economic action serves "ultimate values no matter what they may be." (Weber, The Theory of Social and Economic Organization, Parsons, ed., 1947, pp. 184-186) Weber noted that "the requirements of formal and of substantive rationality are always in principle in conflict." (Ibid., p. 212) Decades later, Simon used a similar terminology to distinct two meanings of "rationality", which have developed separately in economic and psychology. He defined substantive rationality, stemming from the concept of rationality within economics, as behavior that "is appropriate to the achievement of given goals within the limits imposed by given conditions and constraints". Procedural rationality, based in psychology, refers to behavior that "is the outcome of appropriate deliberation".