Who Makes Decisions? How Do They Make Decisions? Actors and Institutions

How are policy decisions made? Nearly 80 years ago, Herbert Simon posited that decisions rarely adhere to the tenets of the rational comprehensive model of decision-making. Instead, policy decisions tend to follow a process known as “bounded rationality.” Applying this to the policy world, Charles Lindblom argues that the policy world is often characterized by “incrementalism,” whereby decisions are the result of a process of “successive limited comparisons,” with each decision building off previous decisions. Just as a boundedly rational decision-maker can still be rational, so too can policymakers employing the branch method make rational, or “good,” policy decisions. Despite general agreement that policy decisions are not fully rational, there is debate over how best to design policies and institutions so as to produce the most effective set of policies. One area where this debate has received considerable scholarly attention has been in education policy, particularly school choice. Whether people “vote with their feet,” as suggested by the Tiebout Model, has been debated extensively, and the findings have enormous implications for the design of educational institutions. Extending from this work, Elinor Ostrom and her colleagues developed the “institutional analysis and development” (IAD) framework to explore how institutional rules shape policy decisions and can solve collective-action dilemmas that emerge from a rational choice framework. By changing institutional arrangements, such as rules and norms, it is possible to change individual behavior. If public organizations are producing inefficient or ineffective policy, then one solution is to redesign the institution.