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Institutions and Rationality in Politics – Three Varieties of Neo-Institutionalists

Published online by Cambridge University Press:  27 January 2009

Junko Kato
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Review Article
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British Journal of Political Science , Volume 26 , Issue 4 , October 1996 , pp. 553 - 582
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Copyright © Cambridge University Press 1996

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References

1 Skocpol, T., ‘Bringing the State Back In: Strategies of Analysis in Current Research’, in Evans, P. B., Rueschemeyer, D. and Skocpol, T., eds, Bringing The State Back In (Cambridge: Cambridge University Press, 1985, pp. 3–37)CrossRefGoogle Scholar; March, J. G. and Olsen, J. P., ‘The New Institutionalism: Organized Factors in Political Life’, American Political Science Review, 78 (1984), 734–49CrossRefGoogle Scholar; March, J. G. and Olsen, J. P., Rediscovering Institutions: The Organizational Basis of Politics (New York: The Free Press, 1989).Google Scholar

2 Mitchell, T., ‘The Limit of the State: Beyond Statist Approaches and the Critics’, American Political Science Review, 85 (1991), 77–96Google Scholar; Mitchell, T., ‘Response: Going Beyond the State’, American Political Science Review, 86 (1992), 1017–21Google Scholar; Bendix, J., ‘Controversy: Going Beyond the State’, American Political Science Review, 86 (1992), 1007–10CrossRefGoogle Scholar; Oilman, B., ‘Controversy: Going Beyond the State’, American Political Science Review, 86 (1992), 1014–17Google Scholar; Sparrow, B. H., ‘Controversy: Going Beyond the State’, American Political Science Review, 82 (1992), 1010–14.Google Scholar

3 Almond, G. A., ‘The Return to the State’, American Political Science Review, 82 (1988), 853–74CrossRefGoogle Scholar; Pederson, O. K., ‘Nine Questions to a Neo-Institutional Theory in Political Science’, Scandinavian Journal of Political Science, 14 (1991), 125–48.CrossRefGoogle Scholar

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5 Skocpol, , ‘Bringing the State Back In’Google Scholar. She does not use the term ‘new institutionalism’.

6 McCubbins, M. D., ‘Introduction’, in Cowhey, P. and McCubbins, M. D., eds, Structure and Policy in Japan and the United States (Cambridge: Cambridge University Press, 1995), 1–16.Google Scholar

7 North, D. C., Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990).CrossRefGoogle Scholar

8 For example, Steinmo, S. and Thelen, K., ‘Historical Institutionalism in Comparative Polities’, in Steinmo, S., Thelen, K. and Longstreth, F., eds, Structuring Politics: Historical Institutionalism in Comparative Analysis (Cambridge: Cambridge University Press, 1992), pp. 1–32CrossRefGoogle Scholar; March, and Olsen, , Rediscovering InstitutionsGoogle Scholar; Levi, M., Cook, K. S., O'Brien, J. A. and Faye, H., ‘Introduction: The Limits of Rationality’, in Cook, K. S. and Levi, M., eds, The Limits of Rationality (Chicago: University of Chicago Press, 1990, pp. 219–63)Google Scholar; Keech, W. R., Bates, R. H. and Lange, P., ‘Political Economy within Nations’, in Crotty, W., ed., Political Science: Looking to the Future, Vol. 2 (Evanston, NJ: Northwestern University Press, 1991), pp. 1–16Google Scholar; Hall, P. A. and Taylor, R. C. R., ‘Political Science and Four New Institutionalisms’ (presented to the Annual Meeting of American Political Science Association in New York, 1994).Google Scholar

9 The terms ‘institutions’ and ‘organizations’ are often used synonymously because both can be applied to some collective bodies, for example, the state, bureaucracy, firm, market and so on. But, I consider ‘organizations’ the better term in the more specific context in which one presupposes certain internal structures in such entities and regards these bodies as unified actors. Knight presents a similar definition of organizations (see Knight, J., Institutions and Social Conflict (Cambridge: Cambridge University Press, 1992)).CrossRefGoogle Scholar

10 Because most scholars who endorse the socio-historical approach pay too little attention to the difference in the rationality assumption between the second and the third groups, I also do not distinguish them in this section. Their differences will be introduced later.

11 Skocpol, , ‘Bringing the State Back In’, pp. 4–6.Google Scholar

12 March, and Olsen, , Rediscovering Institutions, pp. 3–8.Google Scholar

13 Ordeshook, P. C., ‘The Emerging Discipline of Political Economy’, in Alt, J. and Shepsle, K. A., eds, Perspectives on Positive Political Economy (Cambridge: Cambridge University Press, 1990), pp. 9–30.CrossRefGoogle Scholar

14 For example, see Hall, P. A., Governing the Economy (New York: Oxford University Press, 1986)Google Scholar, and Ordeshook, , ‘Emerging Discipline of Political Economy’.Google Scholar

15 Steinmo, and Thelen, , ‘Historical Institutionalism in Comparative Polities’Google Scholar. Their edited book (Steinmo, , Thelen, and Longstreth, , eds, Structuring Politics)Google Scholar is a collection of essays, many of which have developed into books. For example, Dunlavy, C. A., Political Structure and Institutional Change (Princeton, NJ: Princeton University Press, 1993)Google Scholar; Hattam, V. C., Labor Visions and State Power: The Origins of Business Unionism in the United States (Princeton, NJ: Princeton University Press, 1993)CrossRefGoogle Scholar: and Steinmo, S., Taxation and Democracy (New Haven, Conn.: Yale University Press, 1993).Google Scholar These works are good examples of historical institutionalism, but I will review only Steinmo, , Taxation and DemocracyGoogle Scholar, because of the limited space here.

16 Steinmo, and Thelen, , ‘Historical Institutionalism in Comparative Polities’, p. 12.Google Scholar

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22 Calvert, R., Moran, M. J. and Weingast, B. R., ‘Congressional Influence over Policy Making: The Case of FTC’, in McCubbins, M. D. and Sullivan, T., eds, Congress: Structure and Policy (Cambridge: Cambridge University Press, 1987), pp. 493–522Google Scholar; Calvert, R., McCubbins, M. D. and Weingast, B. R., ‘A Theory of Political Control and Agency Discretion’, American Journal of Political Science, 33 (1989), 588–611CrossRefGoogle Scholar; Fiorina, M. P., ‘Legislative Choice of Regulatory Forms: Legal Process or Administrative Process?’, Public Choice, 39 (1982), 33–66CrossRefGoogle Scholar; McCubbins, M. D., ‘The Legislative Design of Regulatory Structure’, American Journal of Political Science, 29 (1985), 721–48CrossRefGoogle Scholar; McCubbins, M. D. and Schwartz, T., ‘Congressional Oversight Overlooked: Policy Patrols versus Fire Alarms’, American Journal of Political Science, 2 (1984), 164–79Google Scholar, reprinted in McCubbins, and Sullivan, , eds, Congress: Structure and PolicyGoogle Scholar; Shepsle, K. A., ‘Institutional Arrangements and Equilibrium in Multidimensional Voting Models’, American Journal of Political Science, 23 (1979), 27–59CrossRefGoogle Scholar; Shepsle, K. A., ‘Institutional Equilibrium and Equilibrium Institutions’, in Weisberg, H. F., eds. Political Science: The Science of Politics (New York: Agathon Press, 1986), pp. 51–81Google Scholar; Shepsle, K. A. and Weingast, B., ‘Structure-Induced Equilibrium and Legislative Choice’, Public Choice, 37 (1981), 503–19CrossRefGoogle Scholar; Weingast, B. R. and Marshall, W. J., ‘The Industrial Organization of Congress; or, Why Legislatures, Like Firms, Are Not Organized as Markets’, Journal of Political Economy, 96 (1988), 132–63.CrossRefGoogle Scholar

23 Moe, T. M., ‘The Politics of Structural Choice: Toward a Theory of Public Bureaucracy’, in Williamson, O. E., ed, Organization Theory: From Chester Barnard to the Present and Beyond (New York: Oxford University Press, 1990), pp. 116–53.Google Scholar

24 Pederson presents a categorization that includes (1) a state-centred theory, (2) a strategic relational theory, and (3) an institutional theory (Pederson, , ‘Nine Questions to a Neo-Institutional Theory’, p. 126).Google Scholar The first and third groups in his categorization may correspond to the first and third in my grouping, respectively. But I do not give an independent place to a strategic relational theory of the state, such as Jessop's (see Jessop, B., State Theory (London: Polity Press, 1991)).Google Scholar Instead, I include it in the first group of works studying the state. This difference derives from Pederson's concern with methodology and theorization in the socio-historical new institutionalism, especially the concept of the state. Rather, my categorization is based on differences in basic units of institutional analysis.

25 Skocpol, , ‘Bringing the State Back In’.Google Scholar

26 Evans, P. R., Dependent Development: The Alliance of Multi-national, State, and Local Capital in Brazil (Princeton, NJ: Princeton University Press, 1979)Google Scholar; Krasner, S. D., Defending the National Interest: Raw Materials Investments and U.S. Foreign Policy (Princeton, NJ: Princeton University Press, 1978)Google Scholar; Nordlinger, E. A., On the Autonomy of the Democratic State (Cambridge, Mass.: Harvard University Press, 1981)Google Scholar; Skocpol, T., States and Social Revolutions: A Comparative Analysis of France, Russia, and China (Cambridge: Cambridge University Press, 1979)CrossRefGoogle Scholar; Stepan, A., State and Society: Peru in Comparative Perspective (Princeton, NJ: Princeton University Press, 1978)Google Scholar; Skowronek, S., Building a New American State: The Expansion of National Administrative Capitalism (New York: Cambridge University Press, 1982)CrossRefGoogle Scholar; Tilley, C., ed., The Formation of National States in Western Europe (Princeton, NJ: Princeton University Press, 1975)Google Scholar; Trimberger, E. K., Revolution from Above: Military Bureaucrats and Development in Japan, Turkey, Egypt, and Peru (New Brunswick, Mass.: Transaction Books, 1978).Google Scholar

27 Schmitter, P. C. and Lehmbruch, C., eds, Trends toward Corporatist Intermediation (Beverly Hills, Calif.: Sage, 1979).Google Scholar Another example of comparative studies on corporatism is Berger, S. D., Organizing Interests in Western Europe: Pluralism, Corporatism and the Transformation of Politics (New York: Cambridge University Press, 1981).Google Scholar

28 Gourevitch, P., Politics in Hard Times (Ithaca, NY: Cornell University Press, 1986)Google Scholar; Haggard, S., Pathways from the Periphery (Ithaca, NY: Cornell University Press, 1990)Google Scholar; Hall, , Governing the EconomyGoogle Scholar; Hart, J. A., Rival Capitalists (Ithaca, NY: Cornell University Press, 1992)Google Scholar; Katzenstein, P., Corporatism and Change (Ithaca, NY: Cornell University Press, 1984)Google Scholar; Katzenstein, P., Small States in World Markets (Ithaca, NY: Cornell University Press, 1985)Google Scholar; Zysman, J., Governments, Markets and Growth: Financial Systems and the Politics of Industrial Change (Ithaca, NY: Cornell University Press, 1983).Google Scholar

29 The extension of this perspective in political science may be very close to ‘sociological institutionalism’, named by Hall and Taylor in ‘Political Science and Four New Institutionalisms’, which defines the institution more loosely and flexibly. For example, see Powell, W. W. and Dimaggie, P. J., eds. The New Institutionalism in Organizational Analysis (Chicago: Chicago University Press, 1991).Google Scholar

30 For his interest in the rational choice approach, see Elster, J., Ulysses and Sirens: Studies in Rationality and Irrationality (Cambridge: Cambridge University Press, 1984).Google Scholar For his interest in social norms, see Elster, J., The Cements of Society: A Study of Social Order (New York: Cambridge University Press, 1989)CrossRefGoogle Scholar; Elster, J., Solomonic Judgements: Studies in the Limitations of Rationality (New York: Cambridge University Press, 1989).Google Scholar

31 Hall, Peter A., ed., The Political Power of Economic Ideas (Princeton, NJ: Princeton University Press, 1989).Google Scholar

32 March, and Olsen, , Rediscovering Institutions.Google Scholar Some of the works, of course, may involve more than one perspective and, thus, it is difficult to classify all the works into the above-mentioned categories. For example, Katzenstein's work can be placed somewhere between the first and second groups, and Friedman's between the second and third. See Katzenstein, P., ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: Wisconsin University Press, 1978)Google Scholar; Friedman, D., The Misunderstood Miracle: Industrial Development and Political Change in Japan (Ithaca, NY: Cornell University Press, 1988).Google Scholar

33 Pederson, , ‘Nine Questions to a Neo-lnstitutional Theory’Google Scholar, also presents a characterization of common theoretical points of the first group of institutionalists. My presentation here is compatible with, but still distinctive from, each of his points, because here I am primarily concerned with its relationship with the rationality assumption, which Pederson includes, but does not make the focus of his discussion.

34 This definition is oversimplified, but, at this point, it is sufficient to show that the criticism on the rationality concept is misdirected. In the final section, I will clarify further the concept of economic rationality in contrast with the bounded rationality concept.

35 Ostrom, E., ‘Rational Choice Theory and Institutional Analysis: Toward Complementarity’. American Political Science Review, 85 (1991), 237–50.CrossRefGoogle Scholar

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37 Steinmo, and Thelen, , ‘Historical Institutionalism in Comparative Politics’.Google Scholar

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40 Before Knight, some empirical and theoretical works showed that social institutions are human artefacts but that their formations are not entirely explained by relying on rational behaviour. For an example of empirical work, see Young, O., Resource Regimes (Berkeley: University of California Press, 1982).Google Scholar

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42 Niskanen, , Bureaucracy and Representative Government.Google Scholar

43 Skocpol, , States and Social Revolutions.Google Scholar

44 Skocpol, , ‘Bringing the State Back In’, p. 15.Google Scholar

45 Mitchell has already shown in detail that Skocpol's perspective of state organization in States and Social Revolutions ultimately relies on the ideology or interest of political leaders or rulers who are constituents of the state (see Mitchell, , ‘Limit of the State’, pp. 86–9)Google Scholar. Kitschelt also considers the combination of historical structuralism and the rational choice approach in Skocpol's work as evidence of the compatibility of the socio-historical and rational choice approaches. See Kitschelt, H., ‘Political Regime Change: Structure and Process-Driven Explanations?’ American Political Science Review, 86 (1992), 1028–34, n. 1.CrossRefGoogle Scholar

46 I thank Stephan Haggard for his suggestion that 1 should include this point here.

47 Mitchell, , ‘Limit of the State’.Google Scholar

48 Bendix, , ‘Controversy’Google Scholar; Sparrow, , ‘Controversy’Google Scholar; Ollman, , ‘Controversy’.Google Scholar

49 Riker, , ‘Political Science and Rational Choice’, p. 175.Google Scholar

50 Riker, , ‘Political Science and Rational Choice’, p. 175.Google Scholar

51 This adjectival clause is important to defend the rationality assumption against the finding in psychology that human behaviours in experimental situations diverge from what a theory of rational choice predicts. See Tversky, A. and Kahneman, D., ‘Rational Choice and the Framing of Decision’Google Scholar, in Hogarth, and Reder, , eds, Rational ChoiceGoogle Scholar. Becker turns this qualification into the strength of the rationality assumption by showing that economic behaviours at the market level can be rational even though irrational decisions dominate individual behaviour in that market. See Becker, G. S., ‘Irrational Behavior and Economic Theory’, Journal of Political Economy, 70 (1962), 1–13.CrossRefGoogle Scholar

52 For example, see McCubbins, M., ‘Introduction’Google Scholar, in Cowhey, and McCubbins, , eds. Structure and Policy in Japan and the United States.Google Scholar

53 Downs, , Economic Theory of Democracy.Google Scholar

54 Bates, R. H., ‘Macropolitical Economy in the Field of Development’Google Scholar, in Alt, and Shepsle, , eds. Perspectives on Positive Political Economy, pp. 31–54.Google Scholar

55 Bates, R. H., ‘Some Contemporary Orthodoxies in the Study of Agrarian Change’, in Kohli, A., ed., The State and Development in the Third World (Princeton, NJ: Princeton University Press, 1986).Google Scholar

56 For example, Bates applies this framework to several aspects of agrarian societies in Africa from pre-colonial and post-colonial periods (see Bates, R. H., Essays on the Political Economy of Rural Africa (Cambridge: Cambridge University Press, 1983).CrossRefGoogle Scholar

57 Bates, , ‘Macropolitical Economy in the Field of Development’, p. 34.Google Scholar

58 Another example of the application of the choice-theoretic approach to rural development emphasizes the more specific utility of the approach, that is, increasing the understanding of collective decision problems in rural development (see Russell, C. S. and Nicholson, N. K., eds, Public Choice and Rural Development (Washington, DC: Resources for the Future Inc., 1981)).Google Scholar

59 Bates, , ‘Macropolitical Economy in the Field of Development’, p. 54.Google Scholar

60 Little, D., ‘Rational-Choice Models and Asian Studies’, Journal of Asian Studies, 50 (1991), 35–52.CrossRefGoogle Scholar

61 Little, , ‘Rational Choice Models and Asian Studies’, p. 35.Google Scholar

62 Little, , ‘Rational Choice Models and Asian Studies’, p. 43.Google Scholar

63 Williamson, O. E., ‘The Modern Corporation: Origins, Evolution, Attributes’, Journal of Economic Literature, 19 (1981), 1537–68, especially p. 1544.Google Scholar

64 Simon, H. A., ‘Rationality as Process and as Product of Thought’, American Economic Review, 68 (1978), 1–16Google Scholar, reprinted in Simon, , Models of Bounded RationalityGoogle Scholar. This article is also cited by Williamson, , ‘Modern Corporation’, p. 1544.Google Scholar

65 Simon, , ‘Rationality as Process and as Product of Thought’, p. 6.Google Scholar

66 Simon, , ‘Rationality as Process and as Product of Thought’.Google Scholar

67 Hall, , Governing the Economy, p. 19.Google Scholar

68 Hall uses ‘organizations’ to mean the same as ‘institutions’ (see Hall, , Governing the Economy, p. 19).Google Scholar

69 He actually uses the term ‘public choice theory’ in his discussion, and broadly includes the approaches that apply economic methods to political analysis. But, we can replace this term with the ‘rational choice approach’ without changing what he means.

70 Hall, , Governing the Economy, pp. 10–13.Google Scholar

71 He treats organization theory based on the concept of bounded rationality (the third group) separately from the conventional public (rational) choice theory based on economic rationality (the second group) but he includes both in the discussion of public choice theory (see Hall, , Governing the Economy, pp. 10–13)Google Scholar. I will show in the last section that this version of organization theory belongs to the third category of new institutionalists if the two different concepts of rationality are clearly distinguished.

72 Hall, , Governing the Economy, pp. 12–13.Google Scholar

71 Haggard, , Pathways from the Periphery.Google Scholar

74 Nordlinger, E. A., ‘The Return to the State: Critiques’, American Political Science Review, 82 (1988), 875–85.CrossRefGoogle Scholar

75 Haggard, , Pathways from the Periphery, p. 4.Google Scholar

76 Haggard, , Pathways from the Periphery, p. 5.Google Scholar

77 Rogowski, R., Commerce and Coalitions: How Trade Affects Domestic Political Alignments (Princeton, NJ: Princeton University Press, 1989).Google Scholar

78 Rogowski, , Commerce and Coalitions, pp. 3–5.Google Scholar

79 He categorizes different interests in trade as those represented by labour, capital and land, which correspond to a three-factor model of trade.

80 Gerschenkron, A., Economic Backwardness in Historical Perspective: A Book of Essays (Cambridge, Mass.: Belknap Press of Harvard University Press, 1962).Google Scholar

81 Moore, B. Jr, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World (Boston, Mass.: Beacon Press, 1967).Google Scholar

82 Przeworski, A., Democracy and the Market (Cambridge: Cambridge University Press, 1991).CrossRefGoogle Scholar

83 The recent work by Putnam is also a good example of the works which combine historical observation and empirical data with an analysis of collective action problems by rational individuals. By comparing communities in northern and southern Italy using detailed empirical data over two decades, Putnam's work has discovered the importance of the environment of individual behaviour in determining the consequences of collective action (see Putnam, R. D., Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993).Google Scholar

84 Steinmo, , Taxation and Democracy.Google Scholar

85 Steinmo, , Taxation and Democracy, p. 198.Google Scholar

86 Steinmo, , Taxation and Democracy, p. 199.Google Scholar

87 Steinmo, , Taxation and Democracy, p. 200.Google Scholar

88 Steinmo, , Taxation and Democracy, chaps. 4–6.Google Scholar

89 It is possible to speculate that the selection of the policies to be studied is a result of the differences between the works by Rogowski and Steinmo. In a trade issue, those with vested interests are more attentive to policy problems and sensitive to gains and losses, because trade affects their major economic activities. However, a tax issue influences the members of a society widely but not very explicitly, and thus they are less likely to seek reliable information and are not always as eager to pursue their interests. In other words, if the political actors put a higher priority on tax issues in their political and/or economic activities, they can be expected to seek their interests more rationally. My work on the recent Japanese tax reform explores this possibility by focusing on a bureaucratic organization in which the policy problems and goals are explicitly defined and shared among members (see Kato, J., The Problem of Bureaucratic Rationality (Princeton, NJ: Princeton University Press, 1994).CrossRefGoogle Scholar

90 Steinmo, , Taxation and Democracy, pp. 201–2.Google Scholar

91 Levi, M., Of Rule and Revenue (Berkeley: University of California Press, 1988).Google Scholar

92 Geddes, B., Politician's Dilemma: Building State Capacity in Latin America (Berkeley: University of California Press, 1994).Google Scholar

93 Geddes, , Politician's Dilemma, p. 187.Google Scholar

94 Swedberg, , Economics and Sociology (Princeton, NJ: Princeton University Press, 1990), p. 41Google Scholar. Becker may go to an extreme here because, in another instance, he himself attempts to defend the approach instead of regarding its use only as a commitment (Becker, G. S., Economic Approach to Human Behavior (Chicago: University of Chicago Press, 1976)).Google Scholar

95 Becker, , Economic Approach to Human Behavior, p. 14Google Scholar (emphasis added). Of course, other rational choice theorists may prefer to defend the rationality assumption for other reasons. For example, Tsebelis, G., Nested Games: Rational Choice in Comparative Politics (Berkeley: University of California Press, 1990), pp. 39–43Google Scholar, defends the rational choice theory as a more coherent theory than alternative approaches because of its theoretical clarity, equilibrium analysis, deductive reasoning, and the interchangeability of individuals in an analysis.

96 Simon, , Models of Bounded Rationality, Vol. 2, p. 370.Google Scholar

97 The minimax rule in a game theoretical situation has the same premise, but applies a different rule of choosing alternative means from a maximization rule and chooses an alternative so as to minimize the worst possible loss.

98 Simon uses the terms ‘procedural rationality’ or ‘bounded rationality’ to mean the same concept which he presents. Both terms – ‘bounded rationality’ and ‘procedural rationality’ – mean basically the same concept, though Simon usually uses the former in more formal and the latter in more descriptive analysis. For a formal presentation of this concept, see Simon, , ‘Behavioral Model of Rational Choice’Google Scholar, and Simon, , ‘Rational Choice and Structure of Environment’Google Scholar. For an interesting contrast between the rationality concept in game theory and thafin learning theory, see Simon, H. A., ‘A Comparison of Game Theory and Learning Theory’, Psychometrika, 21 (1956), 267–72CrossRefGoogle Scholar, reprinted in Simon, , Models of Bounded RationalityGoogle Scholar, and Simon, , Models of ManGoogle Scholar. For further understanding of this concept, see Simon, , Models of Bounded Rationality, pp. 203–495Google Scholar; Simon, , Models of Man, pp. 196–206 and pp. 241–79Google Scholar. For application to political science, see Simon, H. A., ‘Human Nature in Polities’, American Political Science Review, 79 (1985), 293–304.CrossRefGoogle Scholar

99 Simon, , ‘A Comparison of Game Theory and Learning Theory’, p. 271.Google Scholar

100 Simon, , ‘A Comparison of Game Theory and Learning Theory’Google Scholar. The application of bounded rationality is also different from an expected utility theory in economics. The expected utility theory presumes the existence of a ‘real situation’ and then defines the utility function with probabilities.

101 Simon, , Models of Man, p. 198.Google Scholar

102 Simon, , Models of Man, p. 199.Google Scholar

103 Simon, H. A., Administrative Behavior, 3rd edn (New York: The Free Press, 1976), p. 79.Google Scholar

104 Simon himself makes this point very clear in his recent writing. See Simon, H. A., ‘The State of American Political Science: Professor Lowi's View of Our Discipline’, Political Science and Politics, 36 (1993), 49–50, especially p. 50.CrossRefGoogle Scholar

105 In decision theories and organization theories, the concept of bounded rationality has long attracted the attention of scholars. Allison's work on the Cuban Missile Crisis is a prominent example of such studies (Allison, Graham, Essence of Decision (Boston, Mass.: Little, Brown, 1971)Google Scholar). However, the employment of the bounded rationality concept in these fields aims to illuminate the limitations of the perception and information capabilities of human beings without paying much attention to the environment of rational behaviour. This is one of the important reasons why the distinction between the two different concepts of rationality has been neglected in political science.

106 For example, see Simon, , ‘Human Nature in Polities’.Google Scholar

107 Such examples are: North, , Institutions, Institutional Change, and Economic PerformanceGoogle Scholar; Williamson, O. E., Markets and Hierarchies: Analysis and Antitrust Implication (New York: The Free Press, 1975)Google Scholar; Williamson, , Economic Institutions of CapitalismGoogle Scholar. This misunderstanding may derive from the fact that both North and Williamson utilize the concept of bounded rationality to emphasize the incompleteness of information and information burdens on rational individual.

108 Simon, , ‘Behavioral Model of Rational Choice’Google Scholar; Simon, , ‘Rational Choice and Structure of Environment’Google Scholar; Simon, , ‘Comparison of Game Theory and Learning Theory’.Google Scholar

109 Simon, H. A., ‘Rationality as Process and as Product of Thought’, American Economic Review, 68 (1978), 1–16Google Scholar, reprinted in Simon, , Models of Bounded RationalityGoogle Scholar; Simon, , ‘Human Nature in Polities’.Google Scholar

110 Curiously enough, Becker, as I have shown above, agrees with Simon that the economic approach is supported by auxiliary assumptions. They differ in whether to give up the economic approach when faced with the necessity of assumptions other than economic rationality. Becker maintains the assumption of economic rationality because he believes it serves to bind together various human behaviour within a unified framework. Simon replaces it with the assumption of bounded rationality because he is more concerned with specifying auxiliary assumptions that support his framework for analysing rational behaviour.

111 Laver, Michael and Schofield, Norman, Multiparty Government: The Politics of Coalition in Europe (New York: Oxford University Press, 1990).Google Scholar

112 A theoretical example of a behaviour that is truly counter to the assumption of economic rationality is a ‘commitment’ that ‘involves choosing an action that yields a lower expected welfare than an alternative available action’ (Sen, A. K., ‘Rational Fools: A Critique of the Behavioral Foundations of Economic Theory’, in Mansbridge, , ed., Beyond Self-interest (Chicago: University of Chicago Press, 1990), pp. 32–3Google Scholar). When a person's consistent ordering of choosing behaviour is not necessarily related to the person's individual welfare, ‘the existence of a “variety of motives” makes a difference’ (see Sen, A. K., ‘Beneconfusion’, in Meeks, J. G. T., ed., Thoughtful Economic Man: Essays On Rationality, Moral Rules and Benevolence (Cambridge: Cambridge University Press, 1991), 12–16, at p. 15)Google Scholar. In other words, the rational choice framework is silent about the human psychology that shapes the actor's motivation to make choices. A rational choice theorist's quick response to Sen's point about limitations of the economic rationality assumption may be: as long as social scientists are concerned with social outcomes and not with individual psychology, the economic assumption is useful (see Riker, W., ‘Political Science and Rational Choice’Google Scholar, in Alt, and Shepsle, , Perspectives on Positive Political Economy, at p. 173Google Scholar). But, some economists are increasingly interested in that field. For example, see Hogarth, R. M. and Reder, M. W., eds, Rational Choice: The Contrast Between Economies and Psychology (Chicago: University of Chicago Press, 1987).Google Scholar

113 Taylor, Michael, ‘Structure, Culture, and Action in the Explanation of Social Change’, Politics and Society, 17 (1989), 115–57CrossRefGoogle Scholar. He defines a strict theory of rational choice as a thin rational choice theory as follows: ‘(1) rational action is action that is instrumental in achieving or advancing given aims in the light of given belief; (2) the agent is assumed to be egoistic; and (3) the range of incentives assumed to affect the agent is limited.’

114 Taylor, , ‘Structure, Culture, and Action’, p. 150.Google Scholar

115 Silberman defines uncertainty as ‘the inability to predict the kind of decisions that will arise and/or the degree of acceptance of decisions’ (Silberman, Bernard, Cages of Reason: The Rise of the Rational State in France, Japan, the United States, and Great Britain (Chicago: University of Chicago Press, 1993)), p. 21.Google Scholar

116 Budge, Ian, ‘A New Spatial Theory of Party Competition: Uncertainty, Ideology, and Policy Equilibria Viewed Comparatively and Temporally’, British Journal of Political Science, 24 (1994), 443–67.CrossRefGoogle Scholar

117 Schelling, Thomas, The Strategy of Conflict (Boston, Mass.: Harvard University Press, 1960), chap. 3.Google Scholar