2020 · Q5 · Four stages of rational choice, bounded rationality and heuristics (20 marks)

Source: PUBLIC ADMINISTRATION 2020.pdf, PDF page 1 · Answer allocation: 20 marks

Original examination question

Describe the four basic stages in the rational model of decision making and problem solving. When do bounded rationality, satisficing and heuristics enter your own decision making for better? For worse?

Reading note: The first-person examples are illustrative examination examples, not claims about the reader’s personal experience.

Bullet outline

• Define the problem and objectives.
• Generate alternatives; evaluate and choose; implement and review.
• Explain bounded rationality and satisficing.
• Illustrate helpful and harmful heuristics.
• Use explicit criteria, checks and feedback to improve personal decisions.

Full exam-ready answer

Introduction

The rational model presents decision making as a reasoned process for choosing the alternative that best achieves a defined objective. A practical four-stage version includes problem identification, development of alternatives, evaluation and choice, and implementation with review. In actual decisions, limited information and cognitive capacity mean that bounded rationality, satisficing and heuristics often enter the process.

Four basic stages

First, the decision maker defines the problem and the desired outcome. Symptoms should be separated from causes. If applications remain pending, the underlying problem may be incomplete documents, unclear authority or inadequate staffing rather than employee effort alone. Constraints and criteria should also be identified at this stage.

Second, feasible alternatives are generated. These might include simplifying forms, changing workflow, training employees or introducing an electronic system. Considering several options reduces the risk of selecting the first familiar solution.

Third, alternatives are assessed against explicit criteria such as cost, effectiveness, legality, equity and feasibility. The preferred option is chosen after considering trade-offs and uncertainty. A technically efficient choice may still be unacceptable if it violates rights or exceeds available authority.

Fourth, the decision is implemented and reviewed. Responsibilities, resources and timelines must be specified, and actual results compared with expectations. Feedback may reveal that the original diagnosis or chosen intervention needs adjustment.

Bounded rationality and satisficing

Herbert Simon's bounded rationality recognises that people cannot obtain and process all relevant information. Time, knowledge and attention are limited. Satisficing means selecting an option that meets an acceptable threshold rather than searching indefinitely for the theoretical optimum.

For an illustrative personal decision, I might select a study resource that is accurate, affordable and aligned with the syllabus after comparing a manageable number of options. Continuing the search indefinitely would consume time better spent studying. The approach becomes harmful if my threshold is too low or I fail to consider an obviously superior alternative.

Heuristics: benefits and risks

Heuristics are simplifying rules that reduce decision effort. A checklist based on repeated experience can help me prioritise urgent tasks or detect missing information quickly. Such shortcuts are especially useful in familiar situations with reliable feedback.

However, I may judge a risk by a recent vivid incident rather than its actual frequency, demonstrating availability bias. I may also anchor on an initial estimate or favour information that confirms my existing view. These tendencies can make fast decisions consistently inaccurate.

Conclusion

Simplification is unavoidable, but it should be disciplined. I would establish minimum criteria, compare credible alternatives, seek disconfirming evidence and review important outcomes. Rational decision making is therefore best understood as a practical commitment to reason and correction, not an unrealistic claim to complete information.

Study note: This is an original model answer, not an official FPSC marking scheme. The outline is for revision; the prose below it provides the complete answer. Marks guide relative depth rather than a prescribed word count.