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Debating Rationality: Nonrational Aspects of Organizational Decision Making, edited by Jennifer J. Halpern and Robert N. Stern. Ithaca, NY: Cornell University Press, 1998.
Rational Choice Theory and Organizational Theory: A Critique, by Mary Zey. Thousand Oaks, CA: Sage, 1998. Reviewed by Philip Bromiley, University of Minnesota, Minneapolis, Minnesota.
You had to be there. Debating Rationality opens by describing the exciting intellectual exchange of a conference, snowed in, in Ithaca, New York. While the conference may have been a debate on rationality, sadly, the book is not.
Given the title and introduction, I had hoped for a clear exchange of conflicting positions on rationality. Instead, there are several very good review articles and a couple of original contributions. Unlike the 1985 conference Behavioral Foundations of Economic Theory (Journal of Business, 1986), no real advocates of rational models contribute to the book. Without two sides, debates are hard to stage.
However, several fine scholars provide interesting reviews of differing literatures. Zur Shapira reviews, from a behavioral or organizational decision-making approach, the literature on rationality, including issues of bounded rationality and search. He points out some experimental work in behavioral decision theory and offers some suggestions on prescription. Robert Gibbons provides an introduction to economic work in internal organization, with a very commendable effort to show the relation of economic work to previous behavioral ideas. Gibbons points out that his recent work formalizes ideas from Crozier (1964). Colin Camerer outlines the behavioral economics approach to experimental economics: find instances where psychological findings suggest that people violate the principles of traditional game theory, demonstrate that this violation influences economic games, and then look for explanations that fit within economic modeling. Bazerman, Gibbons, Thompson, and Valley identify conditions under which real people can reach better outcomes than game theory predicts they should. Oliver Williamson provides a brief discussion of transaction cost economics and organizations theory. Parks and Smith provide a good overview of the organizational contracting literature, with a balanced consideration of both transactional contracts (which underlie economic treatments of contracting) and relational contracts, but they avoid serious debate or contact with the immense economic literature on contracting. I still hungered for more direct discussion of the rationality issues.
Some of the articles had weak connections to the issue of...