JSGS 865.3 – DECISIONS IN ORGANIZATIONS

UNIVERSITY OF SASKATCHEWAN CAMPUS INSTRUCTOR: Michael Atkinson PHONE: (306) 966-8451 E-MAIL: [email protected] OFFICE HOURS: By appointment OFFICE LOCATION: 148 Diefenbaker Building TERM: Fall 2018 ROOM: Prairie Room and U of R conference room DATE AND TIME

CALENDAR DESCRIPTION

Examines the manner in which decisions are made in organizations, with a particular focus on policy decisions. The course uses a wide variety of behavioral theories to look at phenomena such as policy traps, framing, unwarranted optimism, and group think.

LEARNING OBJECTIVES

JSGS has developed a set of six competencies that all graduates will be able to demonstrate in their JSGS 884 portfolio. The specific readings, assignments and activities in JSGS 865 will help you both acquire and demonstrate the ability to:

• Understand how decisions are made by individuals and in organizations • Think critically and analytically about policy from a decision-making perspective • Analyze policy problems using theories of decision making • Communicate information and analyses critically and effectively

ATTRIBUTES OF JSGS GRADUATES

1. Management, Governance, and Leadership: Ability to inspire support for a vision or course of action and successfully direct the teams, processes, and changes required to accomplish it. 2. Communication and Social Skills: Ability to communicate effectively and build enduring, trust- based interpersonal, professional relationships. 3. Systems Thinking and Creative Analysis: Ability to identify key issues and problems, analyze them systematically, and reach sound, innovative conclusions.

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4. Public Policy and Community Engagement: Ability to understand how organizational and public policies are formulated, their impact on public policy and management and how to influence their development. 5. Continuous Evaluation and Improvement: Commitment to on-going evaluation for continuous organizational and personal improvement. 6. Policy Knowledge: Ability to analyze and contribute content to at least one applied policy field.

APPROACH

Most policy schools aspire in their research and their teaching to say something about why governments do what they do and why there are perceived deficiencies with their efforts. These tasks require an appreciation of how policy is constrained at the micro and macro levels. Constraint is, of course, relative. Governments cannot simply do whatever they want. The capacity to generate goals is itself constrained, and governments are constrained at the macro level by culture, resources, historical paths, class antagonisms, gender biases and institutions.

Policy actors, however, are not simply victims of forces and pressures beyond their control. To adequately model the policy process, room needs to be made for innovation and agency. For all of the demands and constraints, and the "governing ideas" that set the standards of success, there is still room to innovate and to screw things up. In short, there is a micro policy world in which administrators and political actors must operate and a macro world that supplies constraints, some of which are actually liberating.

Decisions in Organizations deals with individual decision makers situated within a set of macro constraints some of which are deliberately intended to overcome individual level-deficiencies others of which are part of our genetic inheritance. We start with individuals, then situate them inside increasingly complex relationships. The result is a course on decision-making that operates at different levels: a) the individual level, where making “rational” decisions is an economic, psychological and philosophical problem; b) the level of interdependent relationships, where cooperation (a critical ingredient of collective rationality) is often modelled by game theory and explained using concepts like social and moral capital; and c) the level of formal organizations, where coordination advantages are realized in through formal roles and routines that overcome rationality limits but can also foster pathological behaviours.

The course begins with a consideration of rational decision making and moves rapidly to incorporate psychological models and consider the prospects for collective rationality. Ways of improving decision making among interdependent individuals are canvassed, followed by a discussion of cultural practices that enhance prosperity and survivability. Formal organizations are the focus of the final part of the

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course. Matching organizational forms to environmental challenges is a significant preoccupation. It is not possible to isolate these topics from one another; overflow and interconnections are inevitable.

The material in this course is built on a number of building blocks:

a) The need to integrate the micro foundations of behaviour with the macro behaviour that is observed. (i.e., the need to start with the decision-making processes of individuals and aggregate this behaviour to that of groups); b) The need to understand the role of uncertainty and indeterminacy (always in the context of the future) c) The role of causality and explanation (e.g., pattern creation) in allowing decisions to be made under uncertainty d) The role of heuristics and biases in dealing with (b) and (c) in the context of decision making e) The role played by established habits, practices and trust in addressing the problems faced by individual decision makers, and f) The set of pathologies that can affect decision making in organizations.

BACKGROUND READINGS

If you want some broad introductions to the more specialized material covered in this course, consider the following: Daniel Kahneman, Thinking Fast and Slow summarizes work on intuitions and biases; Richard Thaler and Cass Sunstein. Nudge, shows how behaviour can be altered to advance policy goals without (much) coercion; Jonathan Haidt, The Righteous Mind, explains the complex basis of moral psychology and the emergence of “groupish” behaviour; and Hebert Simon, Administrative Behavior, is the classic application of psychological insights to organizational behaviour.

COURSE READINGS

Important: As you can see, there are many readings. I do not expect you to read them all, but you must read enough to participate in the discussion. I heartily disapprove of “winging it.”

Some of the readings will be required for everyone. Those are marked with an asterisk. I will pose questions based on those readings. You will need to be ready. Discussion can be intense.

Several of the readings are chapters in books. I have asked them to be put on reserve at the U of R and will make them available in the main office at the U of S. If for some reason you cannot retrieve these readings, we will come up with a workaround.

Some of the other readings will be presented by individual class members, but we cannot cover them all. Some are there in case you develop a passion to pursue a topic in more detail. Those making presentations will be expected to summarize the key concepts and points in a one-page memo that will be distributed to the class by 10:00 AM that day.

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Although the course is organized into separate segments, we cannot devote the same amount of time to them all. I will indicate, at the end of each class, how much I expect to cover during out next meeting. The schedule outlined below is preliminary and probably optimistic.

COURSE OUTLINE

I. Micro Foundations of Decision Theory: Rationality and Bounded Rationality

What Does a “Rational” Decision Look Like? (Week 1)

With few exceptions most of us believe it is preferable for individuals, groups and governments to make rational rather than irrational decisions. Getting agreement on what constitutes rationality is more difficult than agreeing on its advisability. Rationality was originally associated exclusively with logic, but it also implies means-ends calculations, and is now closely linked to the giving of reasons. Reasons include appeals to self-interest, moral imperatives, accepted practices and agreed upon rules. Are some reasons more “rational” than others or are all reasons just rationalizations?

*Andy Norman. 2016. “Why We Reason: Intention Alignment and the Genesis of Human Rationality,” Biology and Philosophy 31 (5): 681-704.

*Jesse Kluver, Rebecca Frazier and Jonathan Haidt. 2014. “Behavioral ethics for Homo economicus, Homo heuristicus, and Homo duplex” Organizational Behaviour and Human Decision Processes 123: 150-158.

Eldar Shafir, Itmar Simonson and Amos Tversky. 1993. “Reason based Choice.” Cognition 49: 11-36.

Rational Choice: Decisions Under Uncertainty (Week 2)

If you must pick one principle for explaining all of human behaviour, then rational self-interest would be a good choice. Neo-classical economics has proposed that expected utility theory, combined with exponential discounting, should be the basic framework used for examining decision making under conditions that involve risk, uncertainty, and the passage of time. Although this theory is challenged by behavioural economists, philosophers and psychologists, policy analysts often treat it as the core decision value theory. It must be understood in order to appreciate the various “anomalies” that have been observed. Topics to cover include: expected utility, diminishing marginal utility of wealth, and risk aversion versus risk neutrality.

*Itzhak Gilboa. 2014. Rational Choice. Boston MA: MIT Press, pp. 35-41

*Review of Expected Utility Theory – Video: Behavioral Economics - Expected Utility Review :// . . / ? = 1 8 ℎ𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 Amartya𝑤𝑤𝑤𝑤𝑤𝑤 𝑦𝑦𝑦𝑦𝑦𝑦 K.𝑦𝑦 𝑦𝑦𝑦𝑦𝑦𝑦Sen. 1977.𝑐𝑐𝑐𝑐𝑐𝑐 𝑤𝑤𝑤𝑤Rational𝑤𝑤𝑤𝑤ℎ 𝑣𝑣 Fools:𝑞𝑞 − A 𝑎𝑎Critique𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎 of𝑣𝑣 the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs 6 (4): 317-44.

ASSIGNMENT 1

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Bounded Rationality (Week 2)

Herbert Simon was the first person in the cognitive sciences to offer a rigorous account of what he called “bounded rationality.” That rationality was bounded did not mean, for Simon, that people are stupid. The nature of rational decision-making required, for him, an appreciation of both the cognitive limitations and the task environment. Some means of addressing limitations, most famously “satisficing,” could yield very high order performance. Simon is an optimist, but can his insights into decision-making translate into better organizational performance?

*Herbert Simon. 1955. “A Behavioral Model of Rational Choice.” Quarterly Journal of Economics 69: 99-118

*Bryan Jones. 1999. “Bounded Rationality,” Annual Review of Political Science 2: 297-331.

Herbert Simon. 1985. “Human Nature in Politics: The Dialogue of Psychology with Political Science.” The American Political Science Review 79(2): 293-304.

John Padgett. 1980. Bounded Rationality in Budgetary Research,” American Political Science Review 74: 354-72.

Collective Rationality: Justice, Morality and Well Being (Week 3)

If we find individual rationality difficult, what are the prospects for collective rationality? Much depends on what that means. If it means the aggregating of individual preferences into a single social welfare function, then the prospects, as Arrow discovered, are not good. If it means adopting a consistent and defensible procedure for making collective decisions, then the prospects improve. We consider two different ways of achieving collectively justifiable decisions: utilitarianism, associated with Bentham and Mill and transported to the policy realm by Goodin; and the capabilities approach associated with Sen and Nussbaum. Topics include intersubjective comparability, the Pareto criterion, consequentialism, and well-being.

*Robert Goodin. 1995. Utilitarianism as Public Philosophy. Cambridge UK: Cambridge University Press, ch. 1

*Martha Nussbaum. 1992. “Human Functioning and Social Justice: A Defense of Aristotelean Essentialism.” Political Theory 20 (2): 202-246.

*Amartya Sen. 1999. Development as Freedom. New York: Alfred A. Knopf. Chapter 3, “Freedom and the Foundation of Justice.”

Christian List. 2011. “The Logical Space of Democracy.” Philosophy and Public Affairs 39 (3): 262-297

John Harasanyi. 1977. “Morality and the Theory of Rational Behavior,” Social Research 44 (4): 623-656

Mozaffar Qizilbash. 1998. “The Concept of Well-Being.” Economics and Philosophy 14 (1): 51-74.

II. The Micro Foundations of Decision Theory: Non-rational Perspectives

System 1 and System 2 (Week 3)

Modern neuroscience has made significant strides in understanding the way that decisions are made in the brain. A popular depiction of this process posits a dual cognitive system – the so-called System 1 is the source of automatic

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and intuitive judgments, while System 2 is the source of rational reasoning. Haidt believes that most decision making has a moral dimension and that we are governed principally by our moral intuitions. Kahneman and Klein debate the relative importance of intuitions and conscious reasoning, while Marshall thinks that an overreliance on System 1 is at the heart of our inability to confront climate change.

*J.St.B.T. Evans. 2003. “In two minds: dual-process accounts of reasoning.” Trends in Cognitive Sciences 7 (10): 454– 459.

*Jonathan Haidt. 2001. “The emotional dog and its rational tail: A social intuitionist approach to moral judgment,” Psychological Review. 108: 814-834.

Daniel Kahneman and Gary Klein. 2009. “Conditions for Intuitive Expertise: A Failure to Disagree.” American Psychologist 64 (6): 515–26. doi:10.1037/a0016755.

George Marshall. 2014. Don’t Even Think About It: Why Our Brains are Wired to Ignore Climate Change. New York: Bloomsbury, Chs. 10 and 41.

Self Delusion (Week 4)

It seems that some of our failure to conform to rational decision making norms stems from a built-in propensity to fool ourselves into believing that we are being rational. Robert Trivers thinks that this propensity is rooted in an evolutionary strategy which may yield long term advantages but poses a significant danger that we will regularly misapprehend current reality. Nickerson and Tenbrunsel et. al., discuss a couple of the many ways in which we delude ourselves about our ability to weigh evidence and make unbiased decisions.

*Robert Trivers. 2011. The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life. New York: Basic Books. Ch. 1

*Ann E. Tenbrunsel and David M. Messick. 2004. “Ethical Fading: The Role of Self-Deception in Unethical Behavior,” Social Justice Research 17: 223-236.

Raymond Nickerson.1998. “Confirmation Bias: A Ubiquitous Phenomenon in Many Guises.” Review of General Psychology 2(2): 175-220.

Loss Aversion, Prospect Theory and Issue Framing (Week 4)

Prospect theory, anchoring and omission bias offer an alternative model to expected utility theory, one that captures the anomalies that exist between the predictions and actual behaviour. In addition to accounting for the differential impact that losses and gains have on people’s decisions, prospect theory views decisions as being based on changes in wealth, rather than on wealth levels. How problems are framed is a critical variable in understanding why decisions take a particular form. Applications of prospect theory (i.e., the differential impact of losses and gains) to policy are examined.

*Daniel Kahneman and Amos Tversky. 1984. “Choices, values and frames,” American Psychologist 39: 341-50.

Jonathan Baron and Ilana Ritov. 1994. “Reference Points and Omission Bias.” Organizational Behavior and Human Decision Processes 59: 475-498.

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Mercer, J. 2005. “Prospect Theory and Political Science,” Annual Review of Political Science 8:1-21

Different Selves: Exponential and Hyperbolic Discounting (Week 5)

Discounted expected utility theory anticipates the degree to which future utility will be discounted, but the decisions predicted by this theory generally do not hold. Instead of making choices in a manner that is consistent with a constant discount rate (exponential discounting), individuals appear to make decisions using a discount rate that falls over time (hyperbolic discounting). This section of the course looks at theoretical models that have been developed to account for this observed decline in the discount rate, and examines the implications of declining discount rates for policy decisions. Areas of particular importance are savings, pensions and addictions.

*George Ainslie. 2005. “Preçis of Breakdown of Will.” Behavioral and Brain Sciences 28:635-673. http://ww.picoeconomics.org/PDFarticles/Breakdown_Will.pdf.

*Alan Jacobs and Scott Matthews. 2012. “Why Do Citizens Discount the Future? Public Opinion and the Timing of Policy Consequences.” British Journal of Political Science 42 (4): 903-935.

David Laibson. 1997. “Golden Eggs and Hyperbolic Discounting.” Quarterly Journal of Economics 112 (2): 443-477.

Thomas C. Schelling. 1984. “Self-Command in Practice, in Policy, and in a Theory of Rational Choice.” The American Economic Review 74(2): 1-11.

Overconfidence and Predictable Surprises (Week 5)

Many organizational leaders are overconfident, and this overconfidence manifests itself in poor predictions regarding plans and investments. The same cognitive errors that lead to overconfidence can also lead to missing what Watkins and Bazerman calls “predictable surprises.” How can these errors be minimized? How does overconfidence affect policy decisions? Do politicians underestimate the time and cost involved in putting policies and programs in place? What are some of the repercussions of this behaviour?

*Michael Watkins and Max Bazerman. 2003. “Predictable Surprises: The Disasters You Should Have Seen Coming.” Harvard Business Review 81(3): 72-80

*Dan Lovallo and Daniel Kahneman. 2003. “Delusions of Success: How Optimism Undermines Executives' Decisions.” Harvard Business Review (2003) July: 57-63

Nasim Nicholas Taleb. 2007. The Black Swan: The Impact of the Highly Improbable. New York: Random House. Chapter 10, “The Scandal of Prediction.”

Bent Flyvbjerg. 2009. “Survival of the Unfittest: Why the Worst Infrastructure Gets Built--and What We Can Do About It.” Oxford Review of Economic Policy 25 (3): 344–67.

J. Edward Russo and Paul Schoemaker. 1992. “Managing Overconfidence.” Sloan Management Review 33(2): 7-17.

Murray Fulton and Kathy Larson. 2009. “The Restructuring of the Saskatchewan Wheat Pool: Overconfidence and Agency.” Journal of Cooperatives 23: 1-19

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III. Strategies for Improving Reasoning

Cost Benefit Analysis (Week 6)

Within government, cost-benefit analysis (CBA) is a popular means of disciplining decision making, even though few agencies use textbook CBA. As the name implies, CBA involves evaluating costs and benefits and proceeding with a course of action only if the latter outweighs the former. Of course, it is never quite so simple. How are costs and benefits calculated? And who bears the costs, who gets the benefits? These are just two of a series of challenges, none of which have been strong enough to dissuade practitioners like Sunstein or theorists like Adler and Posner to give up on it.

*Matthew Adler and Eric Posner. 2006. New Foundations of Cost-Benefit Analysis. Cambridge MA: Harvard University Press, ch. 1, The Traditional View” and ch. 3, “Cost Benefit Analysis as a Decision Procedure.” Much of the argument in an original form can be found in Adler and Posner, 1999. “Rethinking Cost Benefit Analysis.” Yale Law Journal 165.

*Cass Sunstein. 2013. “If Misfearing is the Problem, Is Cost-Benefit Analysis the Solution?” in Eldar Shafir, ed., The Behavioral Foundations of Public Policy. Princeton NJ: Princeton University Press

Steven Kelman 1981. “Cost Benefit Analysis: An Ethical Critique.” Regulation 5: 33-40.

Robert Goodin. 1986. “Laundering Preferences,” in J. Elster and A. Hyland, eds., Foundations of Social Choice Theory Cambridge: Cambridge University Press.

ASSIGNMENT 2

Heuristics (Week 6)

Heuristics are “fast and frugal” ways of making decisions under conditions of uncertainty. They are short cuts based on rapid assessments of situations and problems. For those who follow their “gut feelings,” heuristics are invaluable decision aids. But they are not always reliable, which means that if they are to improve reasoning you have to know something about when to use them and when not to. It is the systematic misuse of heuristics that generates biases. As Cohen points out, in the policy realm we are not especially good at knowing when to follow cues and when to do a bit more thinking.

*Gerd Gigerenzer and Wolfgang Giassmaier. 2011. “Heuristic Decision making.” Annual Review of Psychology 62: 451-82.

*Geoffrey L. Cohen. 2003. “Party over Policy: The Dominating Impact of Group Influence on Political Beliefs,” Journal of Personality and Social Psychology 85 (5): 808-822.

Thomas Gilovich and Dale Griffin. 2002. “Heuristics and Biases: Then and Now.” In Thomas Giolovich, Dale Griffin and Daniel Kahneman eds., Heuristics and Biases: The Psychology of Intuitive Judgment. Cambridge: Cambridge University Press.

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David Myers. 2002. Intuition: Its Powers and Perils. New Haven: Yale University Press, ch. 6 “Intuitions about Reality.”

Incrementalism (Week 7)

One of the earliest, and most enduring, attempts to theorize decision-making in the context of limited cognitive capabilities is captured in the work of Charles Lindblom. Lindblom had little to say about the exact nature of those limitations, but much to say about how they could be mitigated using the strategy of disjointed incrementalism. His version of incrementalism has attracted critics who claim that it is insufficiently precise in its theoretical formulation, as well as those who seek to locate its usefulness in particular circumstances (e.g. Lustick), and still others who are inclined to defend and extend Lindblom’s original insights. Notice that Lindblom’s formulation relies on a heuristic which, like others, has its limitations.

*Charles Lindblom. 1959. “The Science of ‘Muddling Through’.” Public Administration Review 19: 79-88.

______. 1979. “Still Muddling, Not Yet Through.” Public Administration Review 39: 517-26

Ian Lustick. 1980. “Explaining the Variable Utility of Disjointed Incrementalism: Four Propositions.” American Political Science Review 74: 342-353.

Libertarian Paternalism: Nudges (Week 7)

In what has become the most prominent application of behavioural economics, governments have begun to adapt their policies to prompt citizens to make decisions that are personally and collectively beneficial. The book Nudge, by Richard Thaler and Cass Sunstein, popularized the idea that policies could be constructed in ways that take advantage of our psychological propensities. These articles summarize many of the results while Karen Yeung begs to differ.

*Brigitte C. Madrian. 2014. “Applying Insights from Behavioral Economics to Policy Design.” Annual Review of Economics 6: 663-688.

Robert French and Philip Oreopoulos. 2017. “Applying Behavioural Economics to Public Policy in Canada.” Canadian Journal of Economics 50 (3): 599-635.

Saurabh Bhargava and George Lowenstein. 2015. “Behavioural Economics and Public Policy 102: Beyond Nudging.” American Economic Review 105 (5): 396-401

Karen Yeung. 2012. “Nudge as Fudge.” Modern Law Review 75 (1): 122-48

IV. Improving Collective Competence

Collective Competence (Week 8)

If you are persuaded at this point that as individuals we are not that smart, reasonable or rational, what accounts for our success (at least among other primates)? No doubt some of the strategies outlined in the previous section have

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contributed, but we need to move into the realm of culture, organizations and institutions to appreciate our many collective achievements (and eventually some of our collective failures). We start with big claims about our species, which take us back to the Andy Norman article in Section 1.

*Joseph Henrick. 2016. The Secret of Our Success: How Culture is Driving Human Evolution, Domesticating Our Species and Making Us Smarter. Cambridge, MA: Harvard University Press, ch. 12, “Our Collective Brains.”

*Jonathan Haidt. 2012. The Righteous Mind: Why Good People are Divided by Politics and Religion. New York: Pantheon, ch. 10, “The Hive Switch.”

Garett Jones. 2015. Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own. Stanford: Stanford University Press. Read a paper that precedes and summarizes key parts of the argument: G. Jones, “National Productivity and National IQ: Hive Mind Across Asia.” Asian Development Review 28 (1): 51-71.

Rules and Norms: Building Trust (Week 8)

Major claims have been made for rules and norms as the key source of economic progress and political stability. Decisions taken consistent with institutionalized rules and norms remove barriers to cooperation, settle disputes and allow for credible commitments. But they have to be the right institutions, they have to be nested in relationships characterized by social and moral capital and they have to be enforced.

*Robert Axelrod. 1984. The Evolution of Cooperation. New York: Basic Books, chs. 2 and 9. (Available on line)

*Robert D. Putnam. 1995. “Bowling Alone: America’s Declining Social Capital” Journal of Democracy 6 (1): 65-78.

Robert E. Goodin. 2017. “Ethics as an Enabler of Public Policy.” The Political Quarterly 88: 273-279.

Richard Sugden. 1984. “Reciprocity: The Supply of Public Goods Through Voluntary Contributions,” Economic Journal 94: 772-87

ASSIGNMENT 3

Evidence and Argument: Improving Decision Methods (Week 9)

While individuals struggle to meet the standards of reason, especially those standards associated with logic and statistics, there may be “wisdom in crowds.” How does that work? These readings suggest two ways: one based on the Condorcet Jury Theorem, the other on the idea that argumentation is a powerful source of rationality. Consider as well the possibility that if we organize our discussions properly, we will achieve much better outcomes. Watch 12 Angry Men, an old but venerable Hollywood film, to see these ideas combined.

*Elizabeth Anderson. 2006. “The Epistemology of Democracy.” Episteme: A Journal of Social Epistemology 3 (1-2): 8- 26.

*Hugo Mercier and Dan Sperber. 2011. “Why Do Humans Reason: Arguments for an Argumentative Theory.” Behavioural and Brain Sciences 34: 57-111.

Allen E. Buchanan. 2004. “Political Liberalism and Social Epistemology” Philosophy and Public Affairs 32 (2): 95-130.

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Fergus Bolger and George Wright. “Improving the Delphi Method: Lessons from social psychological research,” Technological Forecasting and Social Change 78: 1500-1513.

12 Angry Men: https://www.youtube.com/watch?v=xbb1QzQ9P1w

Identity and Diversity (Week 9)

Well-functioning organizations require co-operation and coordination and identification with the organization is generally considered an asset for these purposes. Building identities requires the establishment of boundaries and so the establishment of insiders and outsiders. There is increasing interest in the idea that groups comprised of individuals with diverse identities may be better at decision making than homogeneous groups. Akerloff and Kranton introduce the identity concept and Page develops the diversity argument. Quirk doubts that there are any decision- making benefits to larger and more diverse groups and Putnam shows that in large groups (or groupings, like neighborhoods) diversity can erode social capital and foster isolation.

*George Akerlof and Rachel Kranton. 2005. “Identity and the economics of organizations.” Journal of Economic Perspectives 16: 9-32.

*Scott E. Page. 2007. “Making the Difference: Applying a Logic of Diversity.” Academy of Management Perspectives 21 (4): 6-20.

Paul J. Quirk. 2014. “Making it Up on Volume: Are Larger Groups Really Smarter?” Critical Review 26 (1-2): 129-150.

Robert D. Putnam. 2007. “E Pluribus Unum: Diversity and Community in the Twenty-first Century The 2006 Johan Skytte Prize Lecture.” Scandinavian Political Studies 30 (2): 137-174.

IV Organizations

Why Organizations? (Week 10)

Organizations are ubiquitous in modern society. They have been described as “superorganisms,” capable of mobilizing knowledge and dominating environments, but also routinizing useless and sometimes harmful behaviour. To understand the fundamental nature of organizations we begin with the existential question: why do we have to have organizations like business firms or government agencies? Why, with the power of markets, do we need administration?

*Herbert Simon. 2000. “Public Administration in Today's World of Organizations and Markets.” PS: Political Science and Politics 33(4): 749-756

*Oliver Williamson. 2002. “The Theory of the Firm as Governance Structure.” Journal of Economic Perspectives 16 (3): 171-195.

Herbert Simon and James March. 1993. Organizations. 2nd ed. Cambridge, MA: Blackwell. (original 1957).

Ronald Coase. 1937. “The Nature of the Firm.” Economica 4(16): 386-405

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Organizations and Agency (Week 10)

One of the reasons economists are skeptical about organizations is that decision authority in organizations is shared, which means that free riding, opportunism and even corruption are persistent problems. Agency theory forms the basis of much economics theorizing about decision-making in organizations. It is premised on the idea that the inevitable tensions that exist between agents and principals require inventive organizational solutions or organizations will generate perverse outcomes. And the problems—informational asymmetries, moral hazard and adverse selection—never seem to entirely disappear.

*Oliver E. Williamson. 1993. “Opportunism and its Critics.” Managerial and Decision Economics 14 (2): 97-107.

Kevin Dowd. 2013. “'Moral hazard and the financial crisis.” Cato journal 29 (1): 141-166.

Organizations and Missions (Week 11)

One way of mitigating the problems of opportunism is to create enough organizational loyalty to foster commitment to the mission of the organization rather than the interests of individual organization members. This fostering of loyalty is evident in efforts to achieve alignment within organizations whose members have diverse responsibilities. Mission statements and long-term planning are manifestations of this impulse that have particular resonance in public sector agencies.

*Timothy Besley and Maitreesh Ghatak. 2003. “Incentives, choice, and accountability in the provision of public services.” Oxford Review of Economic Policy 19 (2): 235–249.

Osterloh, Margit, and Bruno S Frey. 2000. “Motivation, Knowledge Transfer, and Organizational Form.” Organization Science 11 (5): 538–50.

Patricia H Thornton and William Ocasio. 2008. “Institutional Logics.” In The SAGE Handbook of Organizational Institutionalism. Editors: Royston Greenwood, Christine Oliver, Roy Suddaby, and Kerstin Sahlin-Andersson. Sage Publications Ltd.

Knowledge and Organizations (Week 11)

Perhaps the strongest case for organizations is that they embody “teamwork reasoning” and thereby compensate for the errors that we are likely to make as individuals. The authors in this vein argue that agency problems are addressed relatively effectively through institutions and norms at the society level and through culture and identity at the organizational level. Organizations harness the benefits of a “division of cognition” and thus make better decisions than can be achieved by individuals acting alone.

*Chip Heath, Peter P. Larrick and Joshua Klayman. 1998. “Cognitive Repairs: How Organizational Practices Can Compensate for Individual Shortcomings.” Research in Organizational Behavior 20: 1-37.

*James G. March. 1991. “Exploration and Exploitation in Organizational Learning.” Organization Science 2(1): 71-87

Simon, Herbert. 1997. Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations, 4th ed. (orig. 1945) The Free Press, ch. 5.

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When Organizations Fail: Error (Week 12)

Organizations may contribute to, or even be essential to, decision making success, but that’s not always the case. Sometimes the problems are too great or the organizations too weak; sometimes organizations have structural problems that actually reduce our collective cognitive capacity by generating dysfunctional or even pathological behaviours.

*Diane Vaughan.1999. “The Dark Side of Organizations: Mistakes, Misconduct and Disaster.” Annual Review of Sociology 25:271-305.

Karl E. Weick. 1993. “The Collapse of Sensemaking in Organizations: The Mann Gulch Disaster.” Administrative Science Quarterly 38(4): 628-652.

Robert Trivers. 2011. The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life. New York: Basic Books, pp. 201-209 (NASA and the space shuttle disasters).

J. Esser. 1998. “Alive and well after 25 years: a review of groupthink research.” Organizational Behaviour and Human Decision Processes 73(2/3), 116-141.

When Organizations Fail: Misconduct (Week 12)

Debates on conflict of interest have been dominated by legal and philosophical disagreements regarding what constitutes “conflict” and what constitutes “interest.” These debates neglect the psychological problems that confront professionals and public sector managers who are obliged to find a decision or policy path that acknowledges political reality but remains untainted by personal gain. The common spectacle of those who veer off that path gives rise to the question: “What were they thinking?” What’s the answer?

*Henrich Greve, Donald Palmer and Jo-Ellen Posner. 2010.“Organizations Gone Wild: The Causes, Processes and Consequences of Organizational Misconduct.” The Academy of Management Annals 4 (1): 53-107.

Blake E. Ashforth and Vikas Anand. 2003. “The Normalization of Corruption in Organizations.” Research in Organizational Behavior 25: 1–52.

Michael M. Atkinson and Murray E. Fulton. 2013. “Understanding Public Sector Ethics: Beyond Agency Theory in Canada's Sponsorship Scandal.” International Public Management Journal 16 (3): 386–412. doi:10.1080/10967494.2013.825489.

ASSIGNMENTS

Exercises

I will hand out three exercises, one early on in the term, the other two about half way through. These will be worth 5% each for a total of 15%

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Readings

Each student will be required to present at least one reading during the term. Presentations must be preceded by a summary of the reading that identifies the main themes, the main concepts and the policy or governance uses to which insights can be put. More detailed instructions will be made available in class.

Research Paper

The purpose of the research paper is to use the insights from the theoretical literature examined above to examine a policy decision that encountered design and implementation challenges, some of them unexpected. Here are some examples of issues that have occupied Canadian governments. There are lots of other possibilities that can be pursued, but it is best to check with me first.

• The Long Gun registry • Tax harmonization and the GST • The Phoenix pay system • Budgetary decisions and structural deficits • Climate change and the Kyoto and Paris Accords • Blood products and public health • The problem of forecasting natural resource royalties • Pipeline approvals • Securing a reliable supply of radioisotopes • The investigation into missing and murdered Aboriginal women and girls • The cost overruns and poor performance of e-Health systems • Low uptake of programs like the Canada Learning Bond and the New Disability Income Support Program.

EVALUATION

Exercises (three) 25% Reviews/presentations of articles/cases for class 10% Class participation 10% Research paper on a policy decision 30% Final exam 25% Total 100%

LATE ASSIGNMENTS, LATE TO CLASS, MISSED CLASSES

All assignments must be submitted by the due date. If you miss the date for the exercises, 1 % per day will be deducted. After 5 days, there’s no point in handing it in. If you miss the date for the research paper, 2% will be deducted per day, so that on the day after the due date, I will deduct 2% from whatever grade you receive out of 40.

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It pays, therefore, to start early and get the exercises/essay in on time. But I’m not heartless. If there is a genuine emergency, I’m prepared to take that into account. Please see me if you find yourself in that situation.

As for classes themselves, please be on time. If you know you’re going to be late, let me know. If you must miss class, please let me know. If you want to join the class from a remote site, please be in touch with Amanda (Mandy) White at the U of S to work out details. And let me know.

REQUIRED READINGS

See above.

PODCASTS AND THINGS

The New Yorker. The Psychological Research That Helps Explain The Election – http://www.newyorker.com/science/maria-konnikova/the-psychological-research-that-helps-explain-the-election

London School of Economics and Political Science. Success and Luck: good fortune and the myth of meritocracy – http://www.lse.ac.uk/website- archive/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=3669

Planet Money. Episode 736: Messy Nobel – http://www.npr.org/sections/money/2016/11/18/502475485/episode- 736-messy-nobel.

Freakonomics. How to Make a Bad Decision – http://freakonomics.com/podcast/make-bad-decision/.

Freakonomics. Trust Me – http://freakonomics.com/podcast/trust-me/.

Freakonomics. Bad Medicine, Part 1: The Story of 98.6 – http://freakonomics.com/podcast/bad-medicine-part-1- story-98-6/.

STUDENTS WITH SPECIAL NEEDS

U OF S: Students in this course who, because of a disability, may have a need for accommodations are encouraged to discuss this need with the instructor and to contact Disability Services for Students (DSS) at 966-7273.

U OF R: Students in this course who, because of a disability, may have a need for accommodations are encouraged to discuss this need with the instructor and to contact the Coordinator of Special Needs Services at 585-4631.

STUDENTS EXPERIENCING STRESS

University of Regina (U of R): Students in this course who are experiencing stress can seek assistance from the University of Regina Counselling Services. For more information, please visit this website: http://www.uregina.ca/student/counselling/contact.html, or call (306) 585-4491 between 8:30 a.m. to 4:30 p.m. Saskatchewan time Monday to Friday.

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ACADEMIC INTEGRITY AND CONDUCT

U OF S: Understanding and following the principles of academic integrity and conduct as laid out in the University of Saskatchewan’s Guidelines for Academic Conduct is vital to your success in graduate school (available at http://www.usask.ca/university_secretary/council/reports_forms/reports/guide_conduct.php). Ensuring that your work is your own and reflects both your own ideas and those of others incorporated in your work is important: ensuring that you acknowledge the ideas, words, and phrases of others that you use is a vital part of the scholarly endeavour. If you have any questions at all about academic integrity in general or about specific issues, contact any faculty member and we can discuss your questions.

U OF R: Ensuring that you understand and follow the principles of academic integrity and conduct as laid out in the University of Regina’s Graduate Calendar is vital to your success in graduate school (available at http://www.uregina.ca/gradstudies/calendar/policy_univ.shtml#conduct). Ensuring that your work is your own and reflects both your own ideas and those of others incorporated in your work is important: ensuring that you acknowledge the ideas, words, and phrases of others that you use is a vital part of the scholarly endeavour. If you have any questions at all about academic integrity in general or about specific issues, contact your course instructor and to discuss your questions.

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