Ambiguity as part of bounded rationality

Herbert A. Simon started to use bounded rationality as a concept to describe limits on rationality in decision making (Klaes & Sent, 2005, 30–37). Bounded rationality is an approach used in the decision making theory that completes misplaced rational choice (Simon, 1957). Ambiguity is part of the theory of bounded rationality in organizational research (Simon, 1957; 1978; 1997; Selten, 2002). Ambiguity is an extension to the concept of bounded rationality (Vakkuri, 2009, 20).

The conceptual history of bounded rationality goes back a long way historically. Limited intelligence was already used in 1840, finite intelligence in 1880, incomplete rationality in 1920, and approximate rationality in 1940. Simon began to use bounded rationality as a label for the things that economists needed to pay attention to (Simon, 1957; Klaes & Sent, 2005, 37). Rational choice and behavior were strongly attached to economic theory. Simon questioned rational behavior in human decision making. It became “a natural meeting ground” for psychological and economic theory (Simon, 1957, 261).

Simon suggested that no matter how adaptive the behavior of organisms in learning and choice situations is, adaptiveness falls far short of “maximizing” in economic theory.

Simon used an example of an organism. In choice situations organisms do not, in general,

“optimize” but “satisfice.” By satisficing Simon meant that the organism does not choose the best and the most optimal decision alternative. The best and the most optimal alternative is not necessarily even known. The most suitable and sufficient alternative is good enough. A great deal can be learned about rational decision making by taking into account the limitations of the capacities and complexity of the organism, and the fact that the surrounding environment allows for a further simplification of its choice mechanisms. The organism also possesses limited information and limited computational facilities (Simon, 1957, 261).

3.1.1.1 James G. March’s definition of ambiguity

Professor James G. March from Stanford University and Herbert A. Simon’s doctoral student in Carnegie Mellon University in the 1950s developed the bounded rationality theory and the concept of ambiguity in organizational research (Vakkuri, 2009, 21). Simon and March examined both the informational and computational limits on rationality by human beings and explored the consequences of simple payoff functions and search rules in an uncertain environment. March’s school of bounded rationality identifies that there is a discrepancy between full rationality in decision making and in the world where the decision-maker actually lives (Simon & March, 1959; March, 1978; 1988; 1994; March

& Olsen, 1979). Descriptions of decision making in terms of March conformed more to actual human behavior than descriptions built upon classical rationality.

The world where the decision maker actually lives has cognitive limitations that bounds rational decision making. Allocation of attention, problems of attention, and memory, and problems of comprehension and communication are all cognitive limitations (Kahneman, 1973). The decision-maker cannot observe and remember everything, and gets only partial information about decision alternatives and effects. Decision making information is never “perfect.” Organizational learning and motivational boundaries also have an effect on decision making.

Understanding the decision making ecological environment within which we act is an essential part of decision making. Our understanding depends upon our reading of the context we work within (Forester, 1984, 23–31). Decision making is rational only in the present decision making environment. The decision making environment is crucial. In what context are decisions rational, in the past, in the present, or in the future, and what is the overall decision making environment?

The term “environment” is ambiguous. It is not some physically objective world in its totality, but only those aspects of the totality that have relevance for the “life span” of the organism being considered. An organism in this context refers to the decision maker.

What we call the environment is dependent on the “needs,” “drives,” or “goals” of the organism, and upon its perception (Simon, 1957, 262).

In collective decision making there is a problem of conflicting interests and objectives representing the values of different participants. Members of organizations have different wants, motives, and drives (Cyert & March, 1963; March, 1978, 589). The decision making environment and the context is the second constraint in rational decision making.

Intention is one of the features found in the theories of boundedly rational decision making. Choices can be made deliberately or by trial and error (Elster, 1979, 13–19). In the species the pursuit of indirect strategies and waiting are impossible in the simple model.

Man is distinguished from animals as taking one step backwards and two steps forwards.

Human actors make mistakes. Human actors also do not only make choices on the basis of expectations about the future, but also on the basis of their expectations about the expectations of others.

Decision making in organizations is considerably ambiguous. Although choice opportunities may lead to the generation of decision alternatives, and then to an examination of the consequences of those alternatives, and then to the examination of the consequences as objectives, and finally to a decision, this model is not sufficient enough to describe what actually happens (Cohen, March & Olsen 1976, 26).

Ambiguity illustrates the complexity involved in organizational behavior and in choice situations (March & Olsen, 1976, 12). Ambiguity signifies four major kinds of opaqueness in organizations. The ambiguity of intention: organizations may be characterized by ill-defined and inconsistent objectives. The preference function as to what to pursue and how to gain objectives in organizations is often impossible to specify when satisfying both the consistency requirements of theories of choice, and the empirical requirements of describing organizational motives. The second lack of clarity comes the ambiguity of understanding. The causal world in which organizations live is obscure. Technologies are unclear; environments are difficult to interpret. Connections between organizational actions and their consequences are difficult to understand. The third lack of clarity concerns the ambiguity of history. The past is important, but history can be twisted.

What happened, why it happened, and whether it had to happen are all problematic. The fourth lack of clarity concerns the ambiguity of the organization. Individuals vary in the attention they give to decisions. They vary from one time to another. Thus, the pattern of participation is uncertain and changing.

The concept of ambiguity is used in administrative, economic and organizational sciences, psychology, philosophy, and linguistics (Vakkuri, 2009, 18). Simone de Beauvoir (Ruonakoski, 2007, 23) used the concept ambiguïté when referring to the double aspect of the human being; the human being exists in the tension between two forces. The human being is mental but also belongs to a material reality. The human being is a free actor and a subject but also other actors’ targets, an object. The human being is a thought directed to the world and at the same time part of this world. Ambiguity describes duality instead of indefiniteness.

English literary critic and poet Empson (2004, 22) conceptualizes seven types of ambiguity related to poetry and literature by using examples from Shakespeare. The next section looks at Empson’s seven types of ambiguity.

3.1.1.2 William Empson’s seven types of ambiguity

The concept of ambiguity is based on philology and linguistics (Vakkuri, 2009, 18). In this sense it is relevant to scrutinize English literary critic and poet Empson’s definition of ambiguity (2004, 22). Empson conceptualizes seven types of ambiguity related to poetry and literature by using examples from Shakespeare. The first type of ambiguity is defined as: “I have already considered the comparison of two things which does not say in virtue of what they are to be compared. Of the same sort, though less common, is the ornamental use of false anthesis, which places words as if in opposition to one another

without saying in virtue of what they are to be opposed.” Empson uses an example from Peacock’s War Song. The example concerns killing people in a war, and there is a relation between heroes and cravens, and a relationship between their equivalent deaths. There is also a relation between eagles and heroes, ravens and cravens. These distinctions are emphasized differently. This example of ambiguity reminds us of the fortuitous confluence of March and Olsen (1979, 27) and the simultaneity of problems and solutions and their arrival (see section 3.1.4).

In the second type of ambiguity, in word or syntax, the ambiguity takes place when two or more meanings are resolved into one. These are alternatives, even in the mind of the author, not only different emphases, as in the first type of ambiguity (Empson, 2004, 48). The third type of ambiguity takes place when two ideas, which are connected only by being both relevant in the context, can be given in one word simultaneously. In this context, ambiguity is considered as a verbal matter (Empson, 2004, 102). Ambiguity of the fourth type takes place when two or more meanings of a statement do not agree among themselves, but combine to make clear a more complicated state of mind in the author (Empson, 2004, 133).

The fifth type of ambiguity occurs when the author is discovering his/her own idea in the act of writing. The author does not hold it all in mind at once. Empson (2004, 155) refers to “a simile which applies to nothing exactly, but lies halfway between two things when the author is moving from one to the other.” He uses an example from Shakespeare’s poetry:

Our Natures do pursue

Like Rats that ravyn downe their proper Bane A Thirsty Evil, and when we drink we die.

(Measure for Measure, I.ii.) (Empson, 2004, 155)

In this poem, “proper bane” becomes ambiguous, since it is water as well as poison. Poisons were designed to prevent rats from dying in the wainscot. Eating the poison corresponds to the “Fall of the Man,” and in this sense it is the drinking water, a healthy and natural human function, unavoidable in its nature, which brings death. This proper bane then becomes ambiguous. (Empson, 2004, 155.)

The sixth type of ambiguity takes place when a statement says nothing, by tautology, by contradiction, or by irrelevant statements. The reader is forced to invent statements of their own. Statements are liable to conflict with one another. (Empson, 2004, 176.)

The seventh type of ambiguity is the most ambiguous. It takes place when the two meanings of the word, the two values of the ambiguity, are the two opposite meanings defined by the context. The total effect is to show a fundamental division in the writer’s mind (Empson, 2004, 192).

Empson’s types of ambiguities are more illustrative in the literal context and March and Olsen’s ambiguities in the organizational and behavioral context. However, these different definitions assign that ambiguity includes more than two meanings and more.

Ambiguity is more than conciseness. In puns or puzzles, two things are said at once.

However, ambiguity is constructed from more than this. If the pun or puzzle is quite obvious, there is no room for puzzling, and then there is no space for ambiguity (Empson, 2004).