Herbert Simon: Rational

Decision Making Theory

Herbert A. Simon is a major proponent of “Behavioral approach” in the study of
Public Administration. He was a prolific economist and a political scientist, who
advocated for empirical study of organization. His most significant contribution
is the study of decision making process, which is outlined in his seminal work “
Administrative Behaviour”(1947). In this work he laid the foundation for
understanding how individuals and organizations make decisions in complex
environments. Simon was influenced by Elton Mayo's human relations theory
and Bernard's functions of the executive. These theories shaped his
perspective on administration, leading him to equate it with decision-making.
He focused on understanding the decision-making process and improving its
effectiveness. Simon criticized traditional administrative concepts, referring to
them as "myths and proverbs". He found no compatibility between the ideal
administrative process outlined in the "POSDCORB" formula and their practical
use in achieving objectives. Simon divides the decision-making process into
three phases:

1)Intelligence Activity - The first step in rational decision making involves

recognizing and defining the problem at hand. This stage requires gathering
relevant information, understanding the context, and identifying the key issues.
It is essentially the process of becoming aware that a decision needs to be
made and understanding the nature of the decision.

2)Design Activity- Once the problem is identified, the decision maker moves
on to the design stage. In this step, alternative solutions or courses of action
are generated. It requires creative thinking and a thorough exploration of
potential options to address the identified problem. The decision maker aims to
develop a range of feasible alternatives that could lead to a positive outcome.

3)Choice Activity - The final step in the rational decision-making process is

choosing the best alternative from the generated options. Decision makers
evaluate each alternative based on predetermined criteria and select the one
that maximizes benefits or achieves the desired outcomes. This stage requires

Herbert Simon: Rational Decision Making Theory 1

 careful consideration of the consequences and potential risks associated with
each alternative.
Simon emphasizes that decision-making basically involves choice between
alternative plans of actions and choice, in turn, involves facts and values.
According to him, every decision consists of a logical obligation, facts and
values. A fact is a statement of reality indicating the existing deed of act or
state of things. A factual premise can be proven by observable and measurable
needs. Value is an expression of preference which can be observed by
measurable means. The combination of fact and values influence the decision
makers in completing the decision process. Simon makes a distinction between
two types of decisions: Programmed and Non-programmed decisions,1)
Programmed decision making involves routine and repetitive decisions based
on established procedures. These decisions are typically made in predictable
and well-defined situations where standardized processes or rules exist. 2)
Non-programmed decision making, on the other hand, involves novel and
complex decisions where no predetermined procedures exist. These decisions
are unique, require creativity, and often occur in unfamiliar or unpredictable
situations. Moving on Simon differentiates between different types of rationality
a decision is –
1) Objectively Rational -Where it is correct behavior for minimizing given
values in a given situation

2)Subjectively rational- If the decision maximizes attainment relative to

knowledge of the subject.

3)Consciously rational- Where adjustment of means to end is a conscious

process.
4)Deliberately rational- to the degree that adjustment of means to end has
been deliberately sought.

5)Organizationally rational- to the extent the decision is aimed at the

organizational goal.

6)Personally rational- If the decision is directed to the individual growth and

gains.
Simon further says that human behavior is neither totally rational nor totally
irrational. It involves what he calls “bounded rationality”. It recognizes that
decision makers have cognitive limitations, preventing them from considering
all available information. Unlike the classical view of unlimited rationality,
bounded rationality acknowledges the realistic constraints individuals face in

Herbert Simon: Rational Decision Making Theory 2

 processing information and making decisions. This theory is based on the
following assumptions:1)The decision maker is not aware of all the possible
alternatives,2)He does not know the values and results of the various
alternatives available,3)Cognitive limitation of human brain to process
information and 4)He is subjected to personal needs and preferences i.e.
cognitive biases.
Thus Simon proposes a idea "satisficing" a concept combining satisfaction
and sufficing. It suggests decision-makers prefer satisfactory or adequate
solutions over optimal ones due to time and cognitive resource limitations.
Satisficing relates closely to bounded rationality, implying individuals often
choose a minimally acceptable solution instead of seeking the best outcome.
On the basis of this Simon's "administrative man" model suggests that instead
of seeking a perfect solution, the administrative man is content with a 'good
enough' solution. This is due to his inability to perceive all alternatives or
predict all consequences, leading him to make choices based on a basic
understanding of the most crucial factors, rather than maximizing all possible
alternatives.
Simon explains rationality in terms of “means and end” . The term means
signifies methods adopted and the term end signifies the ultimate purpose. If
appropriate means are chosen to reach desired ends, the decision is rational.
However, this simple test of rationality is complicated by the difficulty in
distinguishing means from ends due to the means-end chain. Simon argues
that this chain is rarely unified in an organization, as the link between
organizational activity and the ultimate goal is often unclear and fraught with
internal conflicts.

Critical Analysis:-
Irrespective of its utility, Simon's theory is not above criticism. As critics argue,
Simon has given more importance to decision-making process but has
neglected the social, political, economic factors influencing the administrative
decision-making behavior. Moreover, Simon's work mostly focuses on factual
judgements rather than values. However, exclusion of value would steer the
study of public administration to mechanical, routine and less important
aspects. Similarly, Chester Bernard commented that Simon was trying to
produce physics and at the same time trying to solve the riddle of the universe.
He also made his criticism on various aspects. It was inconsistent in its use of
the term rational and efficient, did not take into account the enormous amount

Herbert Simon: Rational Decision Making Theory 3

 of uncertainty involved in most decisions and did not pay sufficient attention to
the process of communication within organizations. Moving on, Norton Long
criticizes the value-free science of administration stated by Simon which may
lead to unintended and logically unwarranted result of reviving the policy-
administration dichotomy in new verbiage.

Conclusion:
Despite criticism from some scholars, Herbert A. Simon's work has undeniably
made significant contributions to the study of administration and decision-
making. His critique of classical theories, which he labeled as mere proverbs,
prompted a shift in how administration is viewed. Simon's emphasis on the role
of facts, values, behavior, and choice in decision-making has reoriented
discussions on the subject. His concept of “bounded rationality” and model of
the administrative man have not only enhanced our understanding of individual
decision-making patterns but also broadened our perspective on how an
organization's functioning is influenced by the decision-making process.

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