A Primer on

DECISIóN hIG
How Decisioni Happen

James G. March
with the assistance of Chip Heath

The Free Press

New York London Toronto Sydney
 Conte:nts

Acknowledgments v
THp FnsB Pnsss Preface vii
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Copyright @ 1994 by James G. March
1,. Limited Rationality 1
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Library of Congress Catalogíng-ín-Publication Data 2. Rule Following 57

March, James G.
.. , , , | . ,,

, A primer on decision making: how decisions happ en lJames G. Decision Making as Rule Following 57 ,

March; with the assistance of Chip Heath.

p. cm Rules, Identities, and Action 59
Includes bibliographical reference$ and index.
ISBN 0-02-920035-0 Rule Development and Change 76
l. Docision-making. [. Heath, Chip, II. Titlo.
HD30.23.M369 tgg4 Appropriate Rules or Consequerttial Choice? 100
65 8.4 ' 03-dc20 95-4414
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iv Contents

3. Multiple Actors: Teams and Partners 103

Interpersonal Consistenry and Teams L04

Interpersonal Inconsistencies 105
Social Bases of Inconsistencies I\L
Uneasy Partners L20

Politics I39
Acknowledgments
4. Multiple Actors: Conflict and

Decisions and Power I40

Decisions and Coalitions 151
Participation and l)ecision Instabilities 160

Single Actors and Multiple Actors I72

5. Ambiguity and Interpretation 175

rF his book is based on lecture notes from a course I have
Order and Ambiguity in Decision Making 175 I given at Stanford University for several years. The lectures
Ambiguous Bases of Decision Making 180 have profited from a steady flow of intelligent and enjoyable
Loose Coupling in Or ganizations I92 students in the Stanford course. If there are ideas worth credit-
ing here, they deserve much of the credit. The book has been
Garbage Can Decision Process 198
written with the assistance of Chip Heath. Ffe made a rough
Decision Making and the Construction of Meaning 207 preliminary draft from my lecture notes and persuaded me to
Ambiguity and Understanding 2I8 undertake the writing. He has also provided comments on the
chapters as they emerged. He should not have to take any re-
sponsibility for any of it, but I am grateful for his help.
6. Decision Engineering 22I The essays in the book, like the lectures on which they are
based , &re, best seen as a secretary's report to a collection of ex-
Defining Decision Intelligence 222
traordinarily able friends and collaborators with whom I have
Improving Adaptiveness 234 worked on problems of decision making. Among the many, in
Using Knowledge 244 addition to Chip Heath, I should like to cite particularly Ingmitr
Bjórkman, Nils Brunsson, Glenn Carroll, Soren Christcnscn,
Creating Meaning 258
Michael D. Cohen, Richard M. Cyert, Omar El Sawy, Jullc
Elworth, Lars Engwall, Martha S. Feldmor, Henrich ( ircvc,
Notes 273
.1. Richard Harrison, Kaj Hedvall, Scott R. Herriott, Kr"isli¿ttt
Additkmal Reading 275
Kreincr, Theresa Lant, Charles A. Lave, Danicl A. Lt:vilttltitl,
Ittdr,r 2tl-1
Alxntl tlte'Aullutr 2q0
vi Acknowledgments

'W. Meyer, Stephen

Barbara Levitt, I)avid Matheson, John
Mezias, Anne Miner, Johan P. olsen, Jeffrey Pfeffer, Martin
Schulz, W. Richard Scott, Guje Sevón, zur Shapira, Herbert
A.
Simon, Jitendra Singh, Lee S. Sproull, Arthur L. Stinchcombe,
Suzanne Stout, Michal Tamuz, Risto Tainio, and'Xueguang
Zhou.
Despite this dependence on the work of others, the book is
footnoted only *páts"ly. While that may be taken as a manifes- Preface
tation of laziness,it is also an effort to make the essays more a
form of personal conversation than a scholarly treatise. Anyone
who knows the research literature will recogníze the influence
of innumerable colleagues in the assertions and speculations I
make, but ¡f askecl foi a reference for any speciflc one' I fear
I wil claim only that I believe it. I have included a brief list of
additional reaclings at the end of the book.
The ability to áo rhis kind of thing is a lurury bestowed by
support from the Spencer Foundation, the Stanford Graduate
School of Business, and the Scandinavian Consortium for Or-
ganizational Research. And by a wife, who certainly could have
-ft little compendium of ideas for think-
his book is a primer, a
Itto,rght of better things for me to do but often refrained from I ing about how decisions happen. The ideas are not novel.
saying so.
They are familiar to students of decision making and are elabo-
rated at length in the research literature. They are presented
here in their starkest, least elaborate form, a first introduction

'"fi:::ü;s in the book areconcerned primarilywith how de-

cisions actually happen rather than how they ought to happen.
They sometimes draw on theories that purport to say how deci-
sions ought to be made, and the last chapter provides a few ob-
servations on how intetligence is (ot is not) achieved through
decision making. For the most part, however, the book sticks to
a simple collection of ideas that might be useful in understand-
ing decision making as we observe it and participate in it.
Understanding any specific decision in a specific situation rc-
quires a great deal of concrete contextual knowledgc-dct¿rils
about thé historical, social, political, and economic wtlrltls ¡irt r-
rounding the decision and about the individuals, orgitltiz:ttitlllli,
and institutions involved. Such details are nclt prcscntetl irl tlris
book. There are,no stories of the rich dr¿rnlil of'tlccisitltt, ll()
ta

vll
viii Preface Preface lX

elaborations of history. The text tries to be faithful to what is tency. Are decisions occasions in which individuals and insti-
kno-wn about decision making as it actually takes place, but the tutions achieve coherence aqd reduce equivocality? Or are
focus is on ideas that can be used to understand decisions gen- they occasions in which inconsistency and ambiguity are ex-
erally, not on the particular details of any particular decision. hibited, exploited, and expanded?
Chapter L examines ideas of rational choice, particularly lim- The third issue is whether decision making is an instru-
ited rationality. Chapter 2 considers ideas of identity, appropri- mental activity or an interpretive activity. Are decisions to be
ateness, and history-dependent rules. Chapters 3 and 4 look at understood primarily in terms of the way they fit into a prob-
multiple-person decision making, decisions made in the face of lem solving, adaptive calculus? Or are they to be understood
inconsistency in preferences or identities. Chapter 5 treats the primafily in terms of the way they fit into efforts to establish
consequences for decision making of ambiguity in preferences, individual and social meaning?
identities, and experience. Finally, Chapter 6 considers the The fourth issue is whether outcomes of decision process-
prospects for decision engineering. es are seen as primarily attributable to the actions of au-
Underlying these clusters of ideas are several different per- tonomous actors or to the systemic properties of an interact-
spectives on decision making, with numerous variations. Stu- ing ecology. Is it possible to describe decisions as resulting
dents of decision making draw from all the disciplines of social from the intentions, identities, and interests of independent
science-anthropology, cognitive and decision science, eco- actors? Or is it necessary to emphasize the ways in which in-
nomics, organization studies, political science, psycholo {y, and dividu al actors, organ izations, an¿ societies fit together?
sociology. As ideas from those disciplines are woven into the
These issues are not resolved here, but they are exercised a bit.
story of decision making, new forms of old issues are encoun-
tered: issues of reason and ignorance, of intentionality and fate,
of coherence and conflict, of institutions, identities, and rules,
of learning and selection, of meaning and interpretation, of
preferences and obligations.
Those topics will arise naturally in their places, and their de-
tails will not be anticipated here. It may, however, be useful to
note four relatively deep (and not entirely independent) issues
that persistently divide students of decision making:
The first issue is whether decisions are to be viewed as
choice-based or rule-based. Do decision makers pursue a
logic of consequence, making choices among alternatives by
evaluating their consequences in terms of prior preferences?
Or do they pursu e alogic of appropriateness, fulfilling identi-
ties or roles by recognizingsituations and following rules that
match appropriate behavior to the situations they en-
count er?
The second issue is whether decision making is typified
moro by clarity and consistency or by amhiguity ancl inconsis-