Duhemian Themes in Expected Utility Theory

This monographic chapter explains how expected utility (EU) theory arose in von Neumann and Morgenstern, how it was called into question by Allais and others, and how it gave way to non-EU theories, at least among the specialized quarters of decion theory. I organize the narrative around the idea that the successive theoretical moves amounted to resolving Duhem-Quine underdetermination problems, so they can be assessed in terms of the philosophical recommendations made to overcome these problems. I actually follow Duhem's recommendation, which was essentially to rely on the passing of time to make many experiments and arguments available, and evebntually strike a balance between competing theories on the basis of this improved knowledge. Although Duhem's solution seems disappointingly vague, relying as it does on "bon sens" to bring an end to the temporal process, I do not think there is any better one in the philosophical literature, and I apply it here for what it is worth. In this perspective, EU theorists were justified in resisting the first attempts at refuting their theory, including Allais's in the 50s, but they would have lacked "bon sens" in not acknowledging their defeat in the 80s, after the long process of pros and cons had sufficiently matured. This primary Duhemian theme is actually combined with a secondary theme - normativity. I suggest that EU theory was normative at its very beginning and has remained so all along, and I express dissatisfaction with the orthodox view that it could be treated as a straightforward descriptive theory for purposes of prediction and scientific test. This view is usually accompanied with a faulty historical reconstruction, according to which EU theorists initially formulated the VNM axioms descriptively and retreated to a normative construal once they fell threatened by empirical refutation. From my historical study, things did not evolve in this way, and the theory was both proposed and rebutted on the basis of normative arguments already in the 1950s. The ensuing, major problem was to make choice experiments compatible with this inherently normative feature of theory. Compability was obtained in some experiments, but implicitly and somewhat confusingly, for instance by excluding overtly incoherent subjects or by creating strong incentives for the subjects to reflect on the questions and provide answers they would be able to defend. I also claim that Allais had an intuition of how to combine testability and normativity, unlike most later experimenters, and that it would have been more fruitful to work from his intuition than to make choice experiments of the naively empirical style that flourished after him. In sum, it can be said that the underdetermination process accompanying EUT was resolved in a Duhemian way, but this was not without major inefficiencies. To embody explicit rationality considerations into experimental schemes right from the beginning would have limited the scope of empirical research, avoided wasting resources to get only minor findings, and speeded up the Duhemian process of groping towards a choice among competing theories

Heuristics and biases in organizing : conceptual tools for examinations of cognitive biases in organizational routines

The rationality of judgment and decision-making processes has a long pedigree as a central topic in organization studies. Traditionally, organization studies have depicted human rationality as bounded and studied the relationship between boundedly rational individuals and the internal organizational environment. However, recent analyses of the bounded rationality concept suggest it is sometimes used imprecisely, which undermines those organizational theories that build upon it. Further, recent analyses propose the need for renewing the relationship between an individual’s bounded rationality and the structure of the internal organizational environment by using contemporary concepts such as heuristics, cognitive biases, and organizational routines. Consequently, the main research objective of this dissertation is to identify potential entry points of how to conceptually link heuristics and biases to such features of an internal organizational environment as organizational routines. I seek to achieve this main research objective by using a non-empirical research strategy, which means that I choose to service and refine academic tools instead of applying them in some empirical context. The main research objective is achieved through a cumulative effort that is presented in two parts. Part I introduces the academic tools that have helped me to create and achieve more detailed research objectives, which are discussed in Part II in the form of three essays. The three essays demonstrate the following findings. Essay 1 presents a taxonomy that clarifies the conceptual ambiguity related to bounded rationality and its three contemporary descendants: heuristics and biases (HB), natural decision making (NDM), and fast and frugal (FF) theories. Essay 2 presents a categorization of articles that demonstrates how the different antecedents of HB, NDM, and FF theories affect both the discipline and the level in which a specific theory is applied in management and organization studies. Essay 3 presents a model of the microfoundational dynamics of organizational routines, which creates possibilities for combining constructs related to HB theory with constructs related to organizational routines. The three essays contribute to the main research objective in the following ways. Essay 1 improves the construct clarity of bounded rationality and offers tools that scholars can use to map and reflect their own conceptualizations of bounded rationality. Essay 2 demonstrates specific mechanisms that link heuristics and biases to organizational-level phenomena and provides an initial version of a theory of organizational-level heuristics and biases. Essay 3 demonstrates how various structures retain different amounts of endogenous variance in organizational routines and provides a detailed analysis of the constructs that relate to the microfoundational view on routines. In aggregate, the contributions of Essays 1–3 demonstrate how the interaction between an individual’s decisions and mental models and organizational routines can either intensify or mitigate the effects of heuristics and biases.Päätöksenteon rationaalisuus on ollut pitkään keskeinen osa organisaatiotutkimusta. Perinteisesti organisaatiotutkimus on kuvannut ihmisen rationaalisuuden rajoittuneeksi ja keskittynyt tutkimaan rajoittuneesti rationaalisten yksilöiden ja sisäisen organisaatioympäristön välistä suhdetta. Viimeaikaiset rajoittuneesta rationaalisuudesta tehdyt tutkimukset osoittavat tämän käsitteen käytön olevan epätarkkaa, mikä heikentää rajoittuneen rationaalisuuden käsitettä hyödyntäviä teorioita. Lisäksi viimeaikaiset tutkimukset huomauttavat, että rajoittuneesti rationaalisten yksilöiden ja sisäisen organisaatioympäristön välistä suhdetta kuvaavaa tutkimusta olisi syytä uudistaa käyttämällä nykyaikaiselle organisaatiotutkimukselle olennaisia käsitteitä, kuten heuristiikat, kognitiiviset harhat ja organisaatioiden rutiinit. Edellä mainittuihin syihin nojaten väitöskirjani päätavoite on tunnistaa sellaisia yhtymäkohtia, jotka mahdollistavat heuristiikkojen ja kognitiivisten harhojen liittämisen käsitteellisesti osaksi sisäisen organisaatioympäristön, esimerkiksi rutiinien, tutkimusta. Pyrin saavuttamaan tämän päätavoitteen hyödyntämällä ei-empiiristä tutkimusstrategiaa. Toisin sanoen pyrin huoltamaan ja uudistamaan tutkimuksissa käytettäviä työkaluja sen sijaan, että käyttäisin niitä jossain tietyssä empiirisessä ympäristössä. Kirjan rakenteen osalta tutkimuksen päätavoite saavutetaan kahdessa osassa. Ensimmäinen osa esittelee ne tutkimuksissa käytetyt työkalut, jotka auttoivat minua luomaan tarkemmat tutkimustavoitteet. Keskustelen tarkemmista tavoitteista, ja vastaan niihin, tutkimuksen toisessa osassa, joka koostuu kolmesta esseestä. Esitän esseissä seuraavat tulokset: Ensimmäinen essee esittelee taksonomian, joka selventää alkuperäisen rajoittuneen rationaalisuuden ja sen kolmen nykyaikaisen muodon – HB-, NDM- ja FF-teorian – välillä vallitsevia käsitteellisiä epäselvyyksiä. Toisessa esseessä luokittelen tutkimusartikkelit kategorioihin, jotka havainnollistavat kuinka HB-, NDM- ja FF-teorioiden ennakko-olettamat vaikuttavat sekä siihen tieteenalaan että systeemiseen tasoon, jossa kutakin teoriaa on sovellettu organisaatiotutkimuksissa. Kolmannessa esseessä esitän mallin niistä mikrotason osatekijöistä, joista organisaatioiden rutiinit koostuvat. Malli auttaa yhdistämään organisaatioiden rutiinien osatekijöitä yksilöiden heuristiikkoihin ja kognitiivisiin harhoihin. Nämä tulokset edistävät sekä päätavoitteeseen vastaamista että muita tutkimuksia seuraavin tavoin: Ensimmäinen essee täsmentää rajoittuneen rationaalisuuden käsitettä ja tarjoaa työkaluja, joiden avulla muut tutkijat voivat pohtia ja kartoittaa omia käsityksiään rajoittuneesta rationaalisuudesta. Toinen essee sekä tarjoaa alustavan version organisaatiotason heuristiikkoja ja harhoja käsittelevästä teoriasta että havainnollistaa niitä mekanismeja, jotka liittävät heuristiikat ja harhat organisaatiotason ilmiöihin. Kolmas essee havainnollistaa kuinka erilaiset rakenteet säilyttävät eri määrän organisaation rutiinin synnyttämästä muutoksesta ja tarjoaa yksityiskohtaisen analyysin niistä käsitteistä, jotka liittyvät organisaatioiden rutiinien mikrotason tarkasteluun. Lopuksi, yhdistämällä esseiden sisältö, tämä väitöskirja havainnollistaa kuinka yksilön päätösten ja mentaalisten mallien suhde organisaation rutiineihin voi joko vahvistaa tai heikentää heuristiikkojen ja kognitiivisten harhojen vaikutuksia

Towards a new foundation for systems practice : grounding multi-method systemic interventions

My purpose with this PhD has been to provide a new foundation for systems practice in order to ground multi-method systemic interventions. The field of Critical System Thinking (CST), which was established to provide this grounding, finds itself immersed in a crisis called the “paradigm problem”. This has come about because it has sought to integrate different Western epistemologies in order to ground methodological pluralism. In particular, CST has uncritically assumed parallel worlds that speak different languages in its attempt to integrate different systems approaches informed by Western epistemologies that are not ontology-free. Hence, system practice is in need of a new ground to justify the use of different systems methodologies that avoids both a fractured universe and atheoretical pragmatism.I advance a ‘world-hypothesis’, which is essentially a world-image to explain reality. I have pursued a fascinating journey into systems philosophy and systems science to see the universe with new eyes. The result is a new world image called the One World of causally interdependent systems that competes both with the Common World of linguistic meanings constituted by society through language and with the Natural World of extended objects made of interacting parts. The One World hypothesis questions the authenticity of currently prevailing world-images and points to the possibility of a new age for systems thinking. However, controversially for systems scientists, the implication is that they need to give up on both the part-whole and the holarchy concepts.Importantly, if the One World hypothesis is to provide new grounds for systems practice and methodological pluralism, the picture of the universe has to be completed with an understanding of how conscious systems operate. Thus, I provide a scientific hypothesis and I postulate education as a future systems methodology to inform systemic interventions in conscious systems. I also encourage systems scientists and systems practitioners to work together to flesh out a multi-method skeleton to organize the field of systems practice. Finally, I propose the next phase of my own research, which will be to develop an educational systems methodology to improve conscious systems

Pygmalion's Long Shadow - Determinants and Outcomes of Teachers' Evaluations

This volume comprises two papers analyzing the predictors of teachers' evaluations, and another two with the latter's outcomes as the crucial objective. In the underlying data, the Cologne High School Panel (CHiSP), teachers had been asked whom of their 10th class students they consider to be suitable to start academic studies, and whom of them not. The first paper models these evaluations as an outcome of students' cognitive ability in terms of intelligence scores, their average grades, their parents' social class, and their aspirations. Structural equation modeling is used to control for both measurement error and indirect effects of latent and observed variables The second paper adds another level of analysis by investigating to what extent teachers' evaluations depend on reference-group effects in the classroom. Contextual effects of both class-room achievement and social composition as well as their interaction with student achievement and teachers' frame of reference (in terms of grading concepts) are analyzed by three-level cross-classified multilevel models. The third paper uses Esser's (1999) subjective expected utility theory to develop a formal theoretical model of self-fulfilling prophecy effects on students' educational transitions. Teachers' expectations are supposed to affect students' subjective expected probability of educational success, and thereby their educational transition propensities. Analyses control for both sample selection bias and unobserved heterogeneity. And finally, the fourth paper models decreasing self-fulfilling effects over a sequence of educational transitions as a result of actors' belief updating. Hypotheses are tested by means of sequential logit modeling amended by a variety of sensitivity analyses. The four papers are preceded by an elaborate introduction that aims to approximate the underlying causes and effects of all research questions by unveiling the respective social mechanisms

Co-selection in R&D project portfolio management

In the study I analyze the conflicting aspects of project portfolio evolution in a firm. The evolutionary principles of variation, selection and retention are applied to the management of new product development projects. Managers select projects for prioritization. A selection rule is the prioritization rule. In biology, living creatures develop specific features for adaptation as a result of selection rules. However, the selection of specific adaptive features carries along the retention of other, even unforeseen non-adaptive features. Drawing on the evolutionary principles forwarded by Darwin I examine how they manifest in the project portfolio. I define this non-adaptive mechanism as co-selection. By analogy, in portfolio management, if the selection rule for project priority is high revenue and feasibility to global access, other features also survive when the selection rule relating to the prioritization of projects is applied. The evolution of the new product development project portfolio in the case firm displays conflicting trends in the emerging project portfolio over time. Managers pursue prioritization to decrease product development times. But, alas, in the project portfolio the prioritized projects age to a greater degree than non-prioritized projects. Managers prioritize the projects held by the focal business unit more often than those of other business units. However, ultimately the focal business unit has less than a due share of prioritized projects in the portfolio. The results of this study question the applicability of optimizing models in R&D portfolio management in the presence of co-selection. The project portfolio management literature does not provide a mechanism to account for this type of portfolio development. Co-selection provides a mechanism that explains the observed evolution. The study contributes to the conceptualization of the notion of co-selection. The study also provides empirical evidence on co-selection, a non-adaptive evolutionary mechanism to modify R&D project portfolio outcome. The findings give a better understanding of portfolio management of R&D driven new product development projects

Model of Learning Ability

The problem domain of the investigation presented in this dissertation is knowledge increase. In particular the research is concerned with the process of knowledge increase. The research problem formulated is formulated a posteriori: "Which factors determine the increase of personal knowledge that occurs by absorbing a particular new knowledge of an individual, who is a member of an organization, and how these factors work?" To explore and shed light on this problem a number of disciplinary boundaries were engaged and some models, tools, descriptions, etc. were borrowed from a number of related disciplines. These areas are briefly presented in the dissertation, restricting presentation to the relevant issues. There are three models developed for this thesis and they are subsequently integrated into a fourth model. First the 'Model of Learning Willingness' (MLW) is developed to consider personal and organizational value systems. For this model, new concepts have been created, to indicate the position of new knowledge in both personal and organizational value systems. Stable and the unstable states of the model are identified as well as how it is possible to pass from one state to another as result of an interaction between the two value systems by means of influencing each other. Applying a 'systems theory approach' on the cognitive psychology conception of knowledge, the impact of the characteristics of existing knowledge on the absorption of new knowledge is described. The developed model is called the 'Model of Learning Capability' (MLC). - This is the second model. It is also necessary to pay attention to the ability to acquire new knowledge; this is described by the 'Model of Attention' (MA) - the third model. This model is based on two main factors, namely cognitive and social conditions. These three models are thus integrated into fourth one, which is called the 'Model of Learning Ability' (MLA). For exploration/validation the model is wwwed with the Doctus Knowledge-Based Expert System, which was also the means of comparing the evolved hypotheses with the input from reality, namely observations and thought experiments. The first insight from the model is a better understanding of the process of 'knowledge increase'. The model can also be used to support choosing the right person to learn a particular piece of new knowledge, to identify the reason for someone not performing well with regards to learning and/or identifying a possible way of improving the process. Using the logic of the model experts can also be evaluated in the process of knowledge acquisition when building an expert system. Considering the achieved results some new problems emerge: It is not known what motivates the personal value system during the knowledge absorption; it is not known if the model can be extended to other forms of knowledge increase besides learning; it is not known how the social factors apart from love (i.e. power and money) affect the attention. Some new research ideas also evolved from this investigation, e.g. an attempt to model the knowledge using dimensions of understanding

Philosophy and Public Administration: An Introduction (Second Edition)

This book provides a systematic introduction to the philosophical foundations of the study and the practice of public administration. It reviews all the main philosophical streams, from ancient Greek philosophy to the contemporary strands, and discusses their significance for public governance and public management. Ontological and epistemological issues are brought to the fore in discussing contemporary conceptions of the nature of public administration. The quest for justification and legitimacy of public governance is examined, and ‘Common Good’, ‘Social contract’ and ‘Personalism’ arguments vetted. The works of thinkers like Thomas More and Niccolò Machiavelli are revisited and the implications for contemporary public administration are drawn. The second edition of this book further expands on the links between philosophical foundations and research agendas and public administration theory; it also develops on the teaching of philosophy in public administration programme