Attention as Rational Choice

Rational Choice and Organization Theory

INTRODUCTION The theory of preference and rational choice of individuals constitutes the foundation of much of positive economic theory. It is also intimately linked to normative economics, especially the part of normative economics that studies welfare properties of the competitive market mechanism. It is not, therefore, surprising that the theory of individual preference and rational choice has engaged some of the leading economic theorists of our time, such as Kenneth J. Arrow (1958, 1959, 1971), J. R. Hicks (1939, 1956), P. Samuelson (1938, 1947), and A. K. Sen (1969, 1971, 1973, 1974, 1977a, 1977b, 1981, 1986a, 1986b, 1989, 1991, 1993, 1994, 1995). The role of Sen in this foundational area of economic theory has been somewhat different from that of many other prominent theorists. Though, in some of his earlier works (see Sen 1969, 1971, 1977a), Sen has made important contributions to the traditional economic theory of rational choice and preference, several aspects of this theory have come under searching criticism by him. He has repeatedly asked probing questions about the intuitive significance and realism of various elements in the mainstream economic theory of rational choice and drawn attention to many limitations of the theory. The purpose of this chapter is to review Sen's contributions to the theory of rational choice by individuals, especially his contributions as a critic of the conventional economic theory of rational choice.

Environmental Dilemmas and Policy Design. By Huib Pellikaan, Robert J. van der Veen. Cambridge: Cambridge University Press, 2002. 247 pp., $65.00 cloth (ISBN: 0-521-62156-9), $23.00 paper (ISBN: 0-521-62764-8). In Environmental Dilemmas and Policy Design , Huib Pellikaan and Robert van der Veen present an empirical study of environmental attitudes in the Netherlands. They use the results of this study to assess the Dutch government's attempts to foster “self-regulation policy” for certain environmental issues. Pellikaan and van der Veen rely heavily on rational choice theory in their methodology, and the language throughout the book is rather technical. Therefore, the book will be most useful to specialists in rational choice theory or to scholars interested in analyzing collective action problems through the lens of rational choice. Environmental Dilemmas and Policy Design is structured in three parts. The first section provides background to collective action theory and Dutch self-regulation policies. The second section provides a detailed description of the authors' survey of environmental attitudes in the Netherlands. The third section attempts to assess self-regulation policies and asks larger theoretical questions related to moral commitment and collective action problems. Although the book as a whole is too technical and the language too inaccessible for most general classroom use, the study does make an important contribution to the evolving literature that critiques traditional assumptions of rational choice and collective action theory. (For an introduction to rational choice theory, see Arrow 1963 and Riker 1990. For an introduction to critiques of rational choice, see Sen 1997.) Most of the literature on rational choice theory and collective action assumes that rational individuals will value effectiveness and efficiency above all. …

In this chapter, I outline sociological rational choice (RC) theory, discuss its relationship with the broader approach of analytical sociology, and address some misunderstandings that repeatedly occur in discussions and applications. The theory has an axiomatic foundation which provides for rigor, clarity, and empirical testability. The micro-macro link and the often-cited non-intended or 'paradoxical' consequences of social actions are much-debated issues of the RC research program. Furthermore, I consider applications of RC theory in non-strategic and in strategic situations using game theory. With all these elements, RC theory is at the core of a more rigorous perspective in sociology. However, there are also systematic problems in applying the theory to empirical observations that show the limits of RC theory. These 'anomalies' are challenges for RC theory and stimulate the development of alternative theories of bounded rationality. In the final section, I suggest practical step by step guidelines for researchers when applying RC theory to sociological investigations.

The article reexamines the prevailing perception of traditional economics as the science of rational choice among contemporary economists and sociologists, especially rational choice theorists. It proposes that conventional economics is not exclusively the theory of rational choice but also one of irrational choices in the economy. The article aims to contribute toward a fuller understanding and appreciation of classical and neoclassical economics, especially among sociologists, as composite rational choice-irrational choice theory and in that sense a multi- rather than single-paradigm science, thus no different from sociology and other social (and physical) sciences. This may be relevant or interesting to sociologists given that their rational choice colleagues, like economists, extol the “virtues" of conventional and modern economics as a single-paradigm, theoretically unified science around “rational choice” and criticize the “vices” of sociology as plagued by competing paradigms and theoretical disunity. The article supports many economic sociologists’ view or intuition of conventional economics as complex rational-irrational choice theory and multi-paradigm science, and disconfirms rational choice theorists’ interpretation and generalization of it as “rational choice theory” only and single-paradigm unified science.

This chapter shows that rational choice theory may be enriched by its links with social learning theory generally, and differential association in particular. Both behavionsts and cognitive theorists accept that associations are a key dynamic in learning. Sutherland's differential association theory was formulated in terms that appear to be primarily cognitive but that in fact can accommodate the approaches of each of these main schools of learning theory. Gun control is thus an integral aspect of situational crime prevention. The West Australian research focused upon the decision-making processes of 123 violent offenders confined in the prison system at the time of the survey. Particular attention will be given to the subsample of 37 robbers, of whom 15 were gun robbers. Rational choice theory is particularly concerned with crime analysis from the point of view of crime prevention. This can best be done by melding social learning theory research techniques with the rational choice approach.

In this exploratory study, we tested the relevance of social learning, rational choice, and social control theories as explanations of “dining and dashing,” an act that has substantial financial implications for the restaurant industry yet one that has received almost no empirical attention. Dine and dash is defined as people using a food and/or beverage service that is expected to be paid for and leaving the premises with no intention of returning to pay. Using a survey sample of 358 undergraduate and graduate students from a Canadian university, we found partial support for social learning and rational choice theories. Individuals who knew someone else who had dined and dashed were more likely to dine and dash themselves (social learning theory) (OR = 17.85, p < .001). When a person thought they would suffer consequences (e.g., paying a fine), they were less likely to dine and dash (rational choice theory) (OR = 0.76, p < .001). Those who considered the benefits of dining and dashing were more likely to dine and dash (OR = 1.24, p < .01). No variables drawn from social control theory were related to dining and dashing.

HT HE depiction of the natural condition of mankind by Thomas Hobbes (Hobbes 1968) has long been a source of fascination to students of political theory. In the past two decades, the concepts and categories of rational choice theory have been increasingly employed as one means of interpreting, illuminating, and understanding Hobbes' teaching (Hampton 1986; Brams 1985: 139-46; Kavka 1983; Laver 1981: 17-18, 43-47; McLean 1981: 339-51; Taylor 1976; Gauthier 1969). The issue I propose to explore herein is that of determining the extent to which this approach does indeed succeed in bringing clearly into focus the essence of that teaching. I shall suggest that though not without value, the appropriation of Hobbes' teaching to the terms of rational choice theory reaps a good deal less than Hobbes attempted to sow. There are a number of mundane senses in which this conclusion is at once obvious and trivial, all rooted in the fact that Hobbes, seminal thinker that he was, planted widely. To take the extreme, no one employing the conceptual framework of rational choice or game theory attempts to use this framework to say anything about Parts III (Of a Christian Commonwealth) or IV (Of the Kingdome of Darknesse) of Leviathan. If the conclusion that rational choice theory fails to illuminate fully Hobbes' lessons amounted to no more than this, we would be wasting our time. But the conclusion would be significant if it turned out that aspects of Hobbes' theory which rational choice theorists themselves choose to discuss purport to illuminate resisted assimilation. I shall argue that this is just the case, especially in regard to attempts to treat Hobbes' state of nature as an exemplar of a prisoners' dilemma situation. More importantly, the conclusion would take on even greater significance if it turned out that insofar as one specified and reflected upon the differences (underlying the, admitted, similarities) between Hobbes' understanding of the sociopolitical world and that offered by rational choice theory, one were led to question the coherence, cogency, and ultimately the adequacy, of rational choice theory itself as an attempt to make sense of that world.

This article focuses on the role of scientific inference in the study of bureaucracy. Its focus, in particular, is on the micro and neoinstitutional foundations of choice. The context for scientific inference is that offered by King, Keohane, and Verba (KKV) in their book, Designing Social Inquiry. The article notes that KKV essentially stipulates an idea of normal scientific inquiry to allow for the evaluation of competing empirical claims. Two fundamental research programs, those of bounded rationality and rational choice, are assessed for their theoretical and scientific contributions to the study of bureaucracy. The latest turns in the bounded rationality program for organizational behavior have moved to some degree from that program's roots in cognitive psychology to a form of cultural anthropology, while rational choice models have become more sensitized to information costs. Thus, some work originating in the rational choice mode has come to borrow significantly from ideas within the bounded rationality paradigm. Rational choice models also tend to emphasize principal-agent relationships, the most interesting aspects of which, however, are mainly rooted in the peculiarities of American political institutions. Although neoinstitutionalist rational choice theories of bureaucracy have developed a clear and compelling normal science program allowing disputes to be taken out of the realm of theology and into the realms of specification, measurement, and other issues associated with empirical claims, evidence also persists to suggest limits to economic theories of organization and a role for leadership and norms.

As stated elsewhere in this issue, we cannot claim to explain an institution's origin just by the functions it serves. In part thismay be because of the cognitive limitations of those actors who are instrumental in institutional formation and institutional change. But even more clearly, it is the case that rational instrumental choice does not imply functional institutions. Just as rational choice in a prisoner's dilemma may result in inefficient policies, rational choice by actors with conflicting preferencesfor institutions may result in institutions that are suboptimal. Examples of rational choice explanations of dysfunctional institutions are provided in the area of bureaucracy, regulation, healthcare, and budgeting. I argue that the paradoxes and impossibility results of rational choice theory offer the best insights currently available into the persistent inefficiencies of the world ofpolitics.

Until quite recently rational action or choice theory (spawned by Homo Economicus) had gained few adherents amongst those who struggle to find adequate foundational ideas for a sociological theory. Things now look more promising, however; Coleman has given us a truly remarkable work, and a number of journals are beginning to carry articles informed by a rational choice perspective (1990). For many, of course, the entire edifice of sociological theory rests upon assumptions, either that human actions are neither self-regarding nor rational (i.e., not optimally chosen) or that such actions are of peripheral interest because human actors are propelled by Durkheimian structural forces beyond their control-thus at least one version of Homo Sociologicus. Yet for others, the vocabulary of action and motive provides only post hoc rationalizations, and all we are entitled to examine are the entrails of a rationalizing discourse. I suspect, however, that one reason why rational action theory is experiencing a new lease on life is precisely because these various approaches, when stripped of their verbal pretensions and quasi-philosophical veneer, appear to be rapidly leading us nowhere. Although it would not be prudent to claim that rational choice theory is likely to solve all the theoretical puzzles a sociologist might pose, in my view it must be given pride of place. In the space available I cannot make a sustained case for this assertion. Rather I have chosen to concentrate upon one issue, namely the relationship between explanations of human action from (on the one hand) the precepts of rational action theory (RAT) and (on the other) from the constraint or facilitation of normative expectations. I take this route for a number of reasons: first, because for many, the most compelling mode of sociological explanation is in terms of social norms (i.e., normative expectations); second, because Coleman has argued that action compliant with social norms can be subsumed under RAT; and third, because Elster has argued to the contrary (1989). If Coleman is right and Elster wrong, then the case for at least one conception of Homo Sociologicus is undermined. Elster makes several claims, as follows:

[From the introduction]. Rational choice approaches to politics did not originate in the study of the European Union (EU), nor is ‘rational choice’ as such a theory of European integration or of EU politics.1 Rational choice, like constructivism, should be understood as a broad approach to social theory, capable of generating an array of specific theories and testable hypotheses about a range of human behaviors. Over the past two decades, rational choice theories have made rapid inroads into the study of EU politics, most notably through the application of rational choice institutionalism to the study of EU decision-making. In this Chapter, I provide a brief introduction to rational choice theory, examine the application of rational choice analyses to EU politics, assess the empirical fruitfulness of such analyses and identify both internal and external challenges to the rational choice study of the EU. The chapter is organized in five parts. In the first, I briefly summarize rational choice as a ‘second-order’ theory of human behavior and discuss the development of rational choice institutionalism (RCI), which has been the most influential branch of rational choice in EU studies. This section also discusses some of the most common criticisms of rational choice as an approach to human behavior, with an emphasis on its purported methodological ‘pathologies’ and (lack of) empirical fruitfulness, and its alleged inability to theorize about endogenous preference formation or change. The second section briefly considers the range of first-order rational choice theories of European Union politics, starting with traditional integration theories and continuing through liberal intergovernmentalist, RCI and other mid-range theories of EU politics. In the third section, I address empirical applications of rational choice theories, noting the charges of methodological pathologies but also suggesting that rational choice approaches have produced progressive research programs and shed light on concrete empirical cases including the legislative, executive and judicial politics of the EU, as well as on other questions such as public opinion and Europeanization. Rational choice-inspired empirical work on the EU, I argue, has been predominantly progressive, not pathological. The fourth section examines some of the challenges to rational choice theories, including rationalism’s purported ‘ontological blindness’ to a range of empirically important issues, including most notably the issues of endogenous preference formation and change. Like Checkel’s review of constructivist theory (in this volume), I do not focus primarily on the rationalist-constructivist debate in EU studies, but I do suggest, against several recent analyses, that the rationalist-constructivist debate in EU studies has largely been a useful and pragmatic one, which has forced rationalists to confront difficult issues like endogenous preference formation and sources of change. A brief fifth section concludes.

Expected utility theory is both positive and normative. It claims, on the one hand, to describe and predict decisions individuals actually make under uncertainty. Its validity as a positive theory rests on empirical evidence. As a normative doctrine, on the other hand, utility theory is prescriptive. It is supposed to guide decision makers, helping them figure out what to choose and why. The status of its prescriptive claims rests on the appeal of the axioms that generate or define the theory. Empirical investigations into utility theory have established widespread and systematic tendencies among people to disobey the axioms of utility theory. As Fishburn points out: Theories of rational preference and choice in situations . .. under uncertainty ... have come under increasing fire because of their inability to model certain types of reasonable and persistent patterns of preference1 (p. 1). The problem is that the presence of such systematic, reasonable patterns of preference casts doubt on the appeal of the axioms and, thus, on utility theory's normative status. One cannot easily defend a prescriptive theory whose implications are widely and systematically rejected. This tension has recently led a number of decision theorists to try to modify or develop alternatives to utility theory. They have introduced new concepts, such as expected regret, into the theory to explain rational choice under uncertainty, and they have proposed giving up one or another of the traditional axioms. Their aim is to modify the theory in order to create a better fit between norms or prescriptions and empirical observations. Our strategy in this paper is different. We offer a counter-example, but our purpose is not to show some fault with the axioms of utility theory. In many circumstances, we find the standard theory is elegant and predictive of choice. We offer the counter-example to help identify circumstances when at least one of the axioms of utility theory seems to lack appeal. Rather than adjust the theory in an attempt to preserve its universal applicability, we will argue that the standard theory is often a good one, but not for all situations. Under certain circumstances, therefore, we must look for alternatives to expected utility maximization as the normative principle of choice. Risk-benefit analysis rests, to a large extent, on the foundation of expected utility maximization. Characterizing circumstances in which utility theory has greater or lesser appeal provides a perspective on some recent controversies in resource economics. For example, the perspective helps explain why the application of risk-benefit analysis is particularly troublesome to problems of long-term, latent, toxic chemicals, of species extinction, or of resource depletion. The problem and our strategy for resolving it have parallels in moral and political philosophy. Moral theory is also an attempt to defend prescriptive principles which can guide and evaluate human actions. The theory of right action, like the theory of rational choice, is derived from intuitive first principles, not public opinion polls. But moral theories must also be revised or qualified when they prescribe actions that are widely rejected. Rawls refers to this delicate process of revising both theory and intuitions to create a better fit as reaching a point of reflective equilibrium. That is the strategy of decision theorists like Machina, Bell, Loomis and Sugden, and Fishburn, who want to revise the axioms of utility theory. But Rawls and other philosophers apply anSession sponsored jointly with the Association of Environmental. and Resource Economists.

Mainstream economics portrays agents as choosing rationally. Many generalizations in economics concerning how people do in fact choose are also claims about how they ought rationally to choose. If people are, to some reasonable degree of approximation, rational, then a theory of rational preference, belief, and choice will constitute an approximate theory of people's actual preferences, beliefs, and choices. The fact that economics is built around a theory of rationality distinguishes economics from the physical sciences, where quarks and polymers do not choose at all and whose theories have no comparable normative dimension. In common usage, someone is rational if and only if her motives, beliefs, and choices are appropriately sensitive to reasons. Spelling out this vague idea is a huge philosophical challenge. “Folk psychology” – the everyday theory of human rationality – takes actions to derive from constraints, beliefs, and a wide array of motivational factors such as urges, emotions, habits, and desires. So, for example, when one rainy Friday night a hungry student named Ellen takes a frozen pizza out of the refrigerator, unwraps it, puts it in her stove, and turns knobs on the stove, we folk psychologists explain Ellen's action by the constraints (pizzas do not get hot by themselves), Ellen's beliefs – including especially her beliefs that turning the knobs will cause the stove to heat the pizza – and her desire to eat hot pizza. This sort of explanation is familiar but not very satisfactory. Ellen might also like to eat her pizza frozen, or she might also have a desire to reheat some leftover meatloaf. Or she might rather skip dinner and keep studying decision theory. What explains her action is not merely wanting to eat hot pizza (plus possessing the requisite beliefs) but also wanting to do this as much as or more than she wants to carry out any of her feasible alternatives. The theory of rational choice that dominates economics is less ambitious than folk psychology: it aims only to specify formal conditions on preferences, beliefs, and choices. Economists tighten up the folk-psychological account of action by replacing the noncomparative notion of a “desire” with the comparative notion of a “preference.”

This paper argues that there are practical problems of such a kind that neither impartial morality nor rational choice theory can provide us with comfort and guidance in our attempt to make the right choice if confronted with such a problem. It argues that both morality and rational choice theory are bound to misconstrue problems of this kind. Appreciating the limits of both morality and rational choice theory, as currently discussed in the literature (Wolf, Morton, Pettit, Hollis & Sugden), enables us to identify the features of these particular practical problems, and allows us to elaborate the idea of an alternative of oneself, which is crucial to a proper understanding of the kind of practical problem the paper draws attention to. We sometimes find it difficult to determine what would be the best thing to do. Being confronted with such a practical problem, we might look for comfort and guidance from a theory created to help us make the right choice. Morality and rational choice theory are two such theories. However, as I shall argue in this paper, these theories are of no help in some of the most important situations, situations in which one has to make choices that will have a tremendous impact on the course and character of the life one will live. My point is not, at least not in a straightforward way, that these theories are not designed for the purposes we need them for in these situations, as is the case with a hammer that is useless when we are looking for something with which to drive in a screw. No, my point is that these theories, at least as we commonly conceive of them, force us to misconstrue our choices by drawing our attention away from the most accurate description of the options from which we have to choose. It is as if, to dwell upon the metaphor, the fact that we possess a hammer forces us to think of the screw as though it were a nail. This paper is in four parts. In the first I distinguish three kinds of practical problems, suggesting that we treat one of them as a paradigm case because it combines two complications that make it particularly likely to be misconstrued by both morality and rational choice theory (namely, being about personal commitments and long-term individual projects). In the next two parts I discuss the limits of both morality and rational choice theory as these are currently recognised in the literature. I argue that understanding the nature