There are three major categories of approaches to the contemporary study of decision-making. Although all do not share a concern for understanding the cognitive processes, features from each approach have been incorporated into the model presented in the next Chapter. The first category is decision theory, which includes those approaches philosophically derived from economics and mathematics. The second category is loosely called decision support systems and includes approaches from the disciplines of systems engineering, business, organizational information systems, and management science. The third category is psychological decision making, including basic and applied research from the fields of cognition, social judgment, and measurement (Phelps, Pliske, and Mutter, 1987). People often make decisions about public issues on the basis of their intuitions rather than on the basis of expected future effects, and they are often overconfident in the correctness of these intuitions. These problems distort public policy so that, in the end, we have less good and more harm than the limits of nature would otherwise allow (Baron, 1998).
The decision-making process is critical to the success or failure of potential partnerships. Each decision maker possesses a set of values, morals and ethics that help define how things should be and how people ought to behave. Collectively, these are called principles, "self-evident truths" about what he, she or the group stands for, about the goals that are therefore worthy of pursuit, and about what are and what are not acceptable ways of pursuing those goals. These principles are seldom clearly articulated, but they are powerful influences on decisions. They run the gamut from the general ("One should tell the truth") to the specific ("We should focus on our customers") to the compelling ("I must always set a good example for my employees"), and, as Freud tried to tell us, they are not all especially admirable or rational. Whatever one's principles, they are the foundation of one's decisions: Potential goals and actions must not contradict them, or those goals and actions will be deemed unacceptable. Moreover, the utility of decision outcomes derives from the degree to which they conform to and enhance the decision maker's values. In addition to principles, the decision maker has an agenda of goals to achieve--some are dictated by the decision maker's principles ("Because I believe in salvation through acceptance of Jesus Christ, and because I am my brother's keeper, I must seek to convert unbelievers and thereby save their souls") and some are dictated by problems encountered in the environment, although principles still influence how these problems are addressed ("Because my boss refuses to promote me, I must find a new job--but I still wouldn't feel right about leaving without giving proper notice"). Each goal has an accompanying plan for its accomplishment, either formulated at the time the goal is adopted or soon afterward. The various plans for the various goals must be interleaved in time, and it must be possible to coordinate them so that they do not interfere with one another. (Beach, 1996).
The early view of decision-making was that all decisions were properly regarded as generally risky choices that, after extensive evaluation of the available options, resulted from maximization of expected utility or some normative variation thereof. The first change in this early view came through recognition that evaluation seldom is extensive and virtually never is exhaustive (Tversky & Kahneman, 1974). This means that maximization in any strict sense does not occur and that two courses are open to decision theorists. One course is to insist that decision makers are flawed, that they should be trying to maximize expected utility in the manner prescribed by the normative model (Pratt, 1986), and that they need help to do it properly (Humphreys, Svenson, & Vari, 1983). The other course is to attempt to understand what decision makers are trying to do rather than presuming that maximization is the sole aim and then prescribing how it should be done. The second change in the early view came from recognition that decision makers possess a variety of strategies for making choices, many of which have aims quite different from maximization of expected utility (Beach & Mitchell, 1978). This finding gives weight to the second of the two options in that there may be more value in attempting to understand what decision makers are trying to do and how they are trying to do it, than in prescribing what they should be trying to do and how they should be trying to do it. A third change from the early view comes from recognition that choices occur relatively rarely and that past experience usually provides ways of dealing with problems. (Beach, 1996).
Decisions are required primarily when failure of these solutions occurs or is anticipated, and even then the decision may not be merely a choice of the best option from some delineated set of options (Beach & Mitchell, 1990). This places decision-making squarely within the broader context of cognitive science, suggesting that it is a backup for the times when experience fails to provide adequate guidance for how to behave. Because people are conscious of much of their decision-making, and perhaps less conscious of their use of past experience, they tend to overestimate the role that decision-making plays in guiding their moment-to-moment activity.
The fourth change in the early view, which is an extension and consolidation of the previous three, comes from recognition that when decisions occur they occur in steps. The first step consists of screening out unacceptable options, and the second step consists of choosing the best option from among the survivors of screening (Van Zee, Paluchowski, & Beach, 1992). That is, the first step focuses on what is wrong with options, and the second step focuses on what is right--and the two steps are accomplished in quite different ways. It is here that image theory enters the picture: choice, and the many strategies by which it can be accomplished, is a familiar topic in the decision literature, but screening is less so. Moreover, the standards used in screening, as well as the factors that give utility to the outcomes of options in choice, have received very little attention in the behavioral decision literature. Image theory is an attempt to address both screening and the origins of standards, and choice and the origins of utility within the same theoretical framework. (Beach, 1996)
A judgment differs from a decision. Decisions require judgments; but judgments do not require decisions. A decision requires a commitment to some form of action (or inaction), whereas a judgment requires no such commitment. Decision-making requires an underlying foundation of values and ethics. In setting objectives, it is necessary to make value judgments about selecting opportunities within time and resource constraints. In developing relevant alternatives, value judgments are essential to screening the various possibilities emerging from the search activity. In making a decision, the values, as well as the ethical considerations of the moment are significant factors in the process. Even in the follow-up and control stage of the decision-making process, value judgments are unavoidable in taking corrective action to ensure that the implemented choice has a result compatible with the original objective (Harrison, 1999).
Slade proposes an alternative descriptive model of decision-making based on an analysis of an agent's goals, past behavior, and relationships with other agents. His model suggests that a decision maker has a multitude of goals beyond simply maximizing payoffs and minimizing risks. The agent's goals include both personal goals and adopted goals derived from interpersonal relationships. The agent must resolve goal conflicts by making trade-offs (Slade, 1994).
Given the importance of ethical considerations in decision-making it is important to note the unique relationship that public-private partnerships have with the political arena within which these partnerships exist. This environment requires that all such partnerships be subject to the morality of the political arena. Modern discussions suggest that there is a specific morality appropriate to political activity and that its deliverances outweigh considerations of 'ordinary' or 'private' morality" (Coady, 1993). The influence of political pressure impacts the ethical view of public managers. Politicians have the upper hand over public sector managers, and force them into pricing, investment and employment decisions that cater to the need of their local constituents so as to secure their own political gains. Whether public enterprises are seen as being in the hands of managers maximizing power through size or of politicians maximizing their own political interests, the pursuit of these objectives is bound to conflict with efficient performance (Fiorina and Noll, 1978). However, conversion to privatization or public-private partnerships is no guarantee that pressures of special interests,
subsidies and other pathologies commonly associated with the public sector will stop (Starr, 1987). Public organizations have always faced a basic dilemma. They are customarily organized to accomplish a given task or to deliver a particular service, and they are expected to be stable, ordered, predictable, anchored to a permanent funding source, and occupying a particular niche in the public sector. The organization has a staff, records, procedures, and policies, all of which result in order and stability. But the public organization is situated in a dynamic and rapidly changing environment -- an environment to which it must respond. This dilemma is dealt with in two ways: first, by reorganization, and second, by human relations techniques. Simply put, municipalities faced with low performance typically try to change the organization (reorganization) or to change the people in the organization (human relations). (Frederickson, 1980). Neither of these options contemplates a transfer of responsibilty to a private organization.