Consideration of the origin of Herbert Simon���s theory of ���satisficing��� (1933-1947) Reva Brown Oxford Brookes University Business School, Oxford, UK Keywords Decision making, Decision theory, Business administration, History Abstract Herbert Simon���s major contribution to decision-making theory is the concept of ���satisficing���. This was first posited in Administrative Behavior, published in 1947, and the book, concerned as it was with establishing a scientific approach to administrative theory, puts forward an adjustment of then-current economic theory, which viewed administrative choice as a process of maximising. While, over the ensuing decades, Simon adjusted his definitions of both ���economic man��� and of ���satisficing��� in several subsequent publications, the original exposition of these was a major contribution to the area of administrative theory. An attempt has been made here to explore what circumstances might have led Simon into putting forward the concept of ���satisficing���. Introduction In what vacuum is personality formed? Is a man���s language independent of the language of his fathers his attitudes divorced from those of his associates and his teachers? Does a man live for months or years in a particular position in an organisation, exposed to some streams of communication, shielded from others, without the most profound effects on what he knows, believes, attends to, hopes, wishes, emphasises, fears and proposes? (Simon, 1957, p. xiv). This research project originated in an attempt to answer an apparently uncomplicated question: ���What led Simon to his idea that managers ���satisfice��� rather than ���maximise���?��� Initially, the answer seemed equally uncomplicated: Simon���s personal world view (not his personality, but the attitudes and beliefs he held) plus his education at university plus his experience at work resulted in the idea of satisficing. However, a fuller answer has required consideration of Simon���s beliefs about the acquisition, content and purpose of scientific knowledge, rationality, functionalism and positivism, the relation of scientific theories to scientific discovery, the nature of the organisational aspect of society. It also necessitated looking at the intellectual and academic milieu of Chicago in the 1930s and at Simon���s place in it. And it required thinking about whether an ���archaeology of ideas��� is possible, and what the best method for applying such an archaeology might be. The metaphor of archaeology is a useful one in that the method used to answer the question ��� ���What led Simon to his idea that managers ���satisfice��� rather than ���maximise���?��� ��� was a process of excavation, a digging down into layers of the past in order to consider where Simon���s concepts fit into the milieu in which they were first posited. Although archaeologists may find the old and the new existing contiguously, and ideas are not concrete artefacts, the archaeological metaphor can indicate that while ideas may be isolated entities, they have a context in their contemporary environment. A useful approach for understanding is to place ideas in that context and to compare them with their ���ancestors���, in order to consider their development or alteration. The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at www.emeraldinsight.com/researchregister www.emeraldinsight.com/0025-1747.htm MD 42,10 1240 Management Decision Vol. 42 No. 10, pp. 1240-1256 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251740410568944

In order to formulate ways of understanding the evolution of Simon���s ideas, it has been necessary both to consider the nature of the scientific paradigms in which Simon developed and expressed his concepts and also investigate how Simon���s theoretical development was influenced by the person he was and the contextual influences on him. Thus, consideration of the idea of ���satisficing��� began with an examination of the concept itself. The latent content (the influence of Simon���s beliefs about science and society, and of his education and work experience on the formation of those concepts) was then ���excavated��� from the manifest content of his explication of the concepts in Administrative Behavior. Simon���s contribution to decision-making theory has been examined by focussing on both the process and the product of his theorising. Satisficing People will satisfice when they make a decision that satisfies and suffices for the purpose. This satisfactory sufficiency enables decision making which is good enough, rather than the absolute best ��� that which satisfices, while not ideal, will suffice to satisfy requirements. It becomes easier to understand why Herbert Simon expressed himself as he did about good administration if his book, Administrative Behavior, is considered in its historical perspective. Digging into the layers of the past reveals that in 1947, when Simon���s book first appeared, the USA was involved in the after-effects of the Second World War, and efficiency in the organisation and administration of the armed forces had recently been a matter of prime importance. Commercial, industrial and public sector organisations were all aware that a great deal of re-organisation was necessary in order to ���build the peace���. Decision analysis and games theory were in their initial stages of development and positivism, although fairly new to organisation theory, had been a dominant aspect of social theory for decades. In Administrative Behavior, Simon posits a definition of good administration, which requires that, among several alternatives involving the same expenditure, the alternative to be selected is the one that leads to the greatest accomplishment of administrative objectives with the least expenditure. Good administration, or administrative efficiency, is important for conserving the scarce resources that the organisation has at its disposal for accomplishing its tasks. This is ���rational behaviour��� and is evaluated in terms of the objectives of the larger organisation. Simon���s (1947, p. 240) attempt to specify the conditions necessary for achieving administrative efficiency within organisations, leads him to state that the central concern of administrative theory is ���the rationality of decisions ��� that is, their appropriateness for the accomplishment of specific goals���. He adds that the task of administration is to design the environment in such a way that ���the individual will approach as close as practicable to rationality (judged in terms of the organisations goals) in his[1] decisions��� (Simon, 1947, p. 241). In order to provide a clear understanding of the concept of ���rationality���, Simon (1947, p. 75) provides a general definition: Roughly speaking, rationality is concerned with the selection of preferred behavior alternatives in terms of some system of values whereby the consequences of behavior can be evaluated. Simon���s theory of ���satisficing��� (1933-1947) 1241

He then divides this into six kinds of organisational rationality. A decision is: (1) Objectively rational ��� if, in fact, it is the correct behaviour for maximising given values in a given situation. (2) Subjectively rational ��� if it maximises attainment relative to the actual knowledge of the subject. (3) Consciously rational ��� to the degree that the adjustment of means to ends is a conscious process. (4) Deliberately rational ��� to the degree that the adjustment of means to ends has been deliberately brought about (by the individual or the organisation). (5) Organisationally rational ��� if it is oriented to the organisation���s goals. (6) Personally rational ��� if it is oriented to the individual���s goals. The view that efficient organisational activity attempts rationally to maximise the attainment of certain ends with the use of scarce means is characteristic of economic as well as administrative theory[2]. Simon suggests that ���rational man��� (or ���economic man���) is synonymous with ���utility maximising man���. (Simon���s ���satisficing man��� is the individual operating with rationality which is practically feasible within the organisation.) The second edition of Administrative Behavior was published in 1957, and was a reproduction of the 1947 text. The Preface, however, was extended and, in it, Simon made the first of the subsequent adjustments to his exposition of administrative behaviour. In the 1957 Preface, Simon defines what he means by ���organisation���: ���the complex pattern of communications and other relations in a group of human beings��� rather than ���something drawn on charts or recorded in elaborate manuals of job descriptions��� (Simon, 1957, p. xxiii). This is an indication of Simon���s tendency in Administrative Behavior to ���have his cake and eat it���. While he says that an organisation is a pattern of relationships, he discusses the organisation in terms of ���roles��� ��� the cultural values of the organisation. This does not tie in comfortably with his positivistic approach to organisations and is an indication of his inclusion of voluntarism into his positivistic paradigm. The 1957 Preface also contains Simon���s description of ���economic man���, who is a normative decision-maker: Economic man has a complete and consistent system of preferences that allows him always to choose among the alternatives open to him he is always completely aware of what these alternatives are there are no limits an the complexity of the computations he can perform in order to determine which alternatives are best probability calculations are neither frightening nor mysterious to him (Simon, 1957, p. xvi). On the other hand, ���administrative man��� exhibits: a kind of rational behaviour that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist (Simon, 1957, p. 240). The difference to decision making is that in most global models of rational choice, ���economic man��� evaluates all alternatives before making his choice. However, in actual human decision making, alternatives are often examined sequentially and the first satisfactory alternative is likely to be the one actually selected ��� satisficing. MD 42,10 1242