# Administrative Behavior (Simon 1947) ## 🎯 핵심 주장 **"The leader is only a bus driver; the passengers can get off."** Organizational decision-making is constrained by **bounded rationality**—limited computational capacity, information, and time. Authority works through **acceptance of premises**, not obedience to commands. ## 💡 Null Breaking **They Said**: Rational choice theory—perfect information, unlimited computation, utility maximization. **Simon Said**: Humans **satisfice** (seek "good enough"), not optimize. Organizations provide decision premises that members accept, creating **zones of acceptance** (extending Barnard). **Surprise**: 1. Bounded rationality ≠ irrationality (it's rational given constraints) 2. Organizations succeed by **simplifying decision problems**, not solving complex ones ## 🔑 Keep / Retire ### Keep ✅ - **Bounded rationality**: Computational + informational limits - **Satisficing**: Good enough > optimal - **Decision premises**: Organizations provide frameworks for thinking - **Authority = accepted premises**: Not commands but mental models - **Attention as scarce resource**: Can't think about everything ### Retire/Update ❌ - **Too cognitive**: Underplays politics and coalitions (March 1962 adds this) - **Individual-focused**: Organizations are coalitions, not collections of individuals - **No equilibrium concept**: Later work adds game theory ## 🧱 논증 블록 ### Block 1: Bounded Rationality Humans face: - Limited computational capacity - Imperfect information - Cognitive constraints (memory, attention) → Can't optimize; must satisfice ### Block 2: Organizational Decision-Making Organizations help by: 1. **Simplifying**: Breaking complex problems into sub-problems 2. **Routinizing**: Standard operating procedures reduce cognitive load 3. **Specializing**: Divide attention across members ### Block 3: Authority as Acceptance Leaders don't command outcomes; they provide **decision premises**: - Goals to pursue - Information to consider - Procedures to follow Members accept these premises → enter "zone of acceptance" → follow guidance ### Block 4: The Bus Driver Metaphor Leader can steer (choose direction), but passengers can exit (refuse to follow). Effective leadership requires passengers to **stay on the bus**. ## 🔗 Connections ### Builds On - **Barnard (1938)**: Authority = acceptance, zone of indifference - Simon extends: Acceptance of **decision premises**, not just orders - **Classical decision theory**: Rational choice - Simon limits: Bounded rationality ### Built Upon By - **March & Simon (1958)**: Organizations—expanded with search, learning - **Cyert & March (1963)**: Behavioral theory—added political coalitions - **Kahneman & Tversky (1970s+)**: Behavioral economics—heuristics and biases - **Gibbons (2025)**: Bounded rationality + coalitions → equilibrium-building challenge ### Parallel Traditions - **Economics**: Incomplete contracts (Coase, Williamson) - **Sociology**: Organizational ecology, institutional theory - **Psychology**: Cognitive science, decision-making ## 🎓 Teaching Notes ### The Bus Driver Insight Classic example: University president - **Thinks they're**: Steering the bus (choosing university direction) - **Actually**: Passengers (faculty) can exit (leave) if unhappy - **Reality**: President provides decision premises faculty accept (or don't) ### Bounded Rationality ≠ Stupidity Students misunderstand this constantly! **Not**: People are dumb **Is**: Given constraints (time, info, computation), people are **adaptively** rational Example: Chess - **Unbounded**: Calculate all possible moves (impossible) - **Bounded**: Use heuristics ("control center"), satisfice (good move > best move) ### Connection to Gibbons | Simon (1947) | Gibbons (2025) | |--------------|----------------| | Decision premises | Shared interpretations | | Zone of acceptance | Equilibrium participation | | Bounded rationality | Clarity problem (categorization limits) | ## 🔬 Research Implications ### Predictions 1. **Organizations > individuals** at complex tasks (division of labor in thinking) 2. **Routines matter**: Reduce cognitive load, enable coordination 3. **Attention allocation** predicts organizational outcomes 4. **Decision premises** shape downstream choices (path dependence) ### Empirical Challenges - Hard to measure "bounded rationality" directly - Satisficing vs. optimizing: observationally equivalent? - Decision premises: How to identify what people accept? ### Modern Extensions - **Attention-based view** (Ocasio 1997) - **Carnegie School** (March, Cyert): Routine search, political coalitions - **Gibbons-Holden-Powell (2021)**: Categorization shapes visible equilibria ## 📊 Impact ### Academic - **35,000+ citations** - **Nobel Prize 1978**: Founded "satisficing" economics - Created **Carnegie School** tradition - Foundation of **behavioral economics** (Kahneman, Thaler) ### Practical - Influenced AI (satisficing algorithms) - Management: Focus on decision processes, not just outcomes - Policy: Recognize cognitive limits in regulation design ## 📝 Personal Notes ### Why This Matters for 14.282 **Module 3: Delegation** - Aghion-Tirole formal vs. real authority - Simon: Real authority = whose premises are accepted **Module 6: Culture** - Culture as **shared decision premises** - Schein: "Assumptions" = Simon's "premises" - Gibbons: Building culture = building shared interpretations ### The Triple Foundation 1. **Coase (1937)**: Incomplete contracts 2. **Barnard (1938)**: Authority = acceptance 3. **Simon (1947)**: Bounded rationality → Together explain WHY visible hands matter: - Contracts incomplete (Coase) - Cooperation voluntary (Barnard) - Cognition limited (Simon) ### Simon + GH (1986) GH: Ownership determines residual control rights Simon: But control requires **acceptance** → Property rights are necessary but not sufficient! ## 🎯 One-Sentence Summary Organizations help boundedly rational individuals make decisions by providing accepted premises, routines, and attention structures—not through commands but through frameworks for thinking. --- *"The leader is only a bus driver; the passengers can get off."* — Simon (1947) *"The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems."* — Simon (1957) *"Bounded rationality + coalitional management = clarity problem"* — Gibbons (2025), building on Simon