The tyranny of small decisions is a phenomenon explored in an essay of the same name, published in 1966 by the American economist Alfred E. Kahn.The article describes a situation in which a number of decisions, individually small and insignificant in size and time perspective, cumulatively result in a larger and significant outcome which is neither optimal nor desired. It is a situation where a series of small, individually rational decisions can negatively change the context of subsequent choices, even to the point where desired alternatives are irreversibly destroyed. Kahn described the problem as a common issue in market economics which can lead to market failure. The concept has since been extended to areas other than economic ones, such as environmental degradation, political elections and health outcomes.
A classic example of the tyranny of small decisions is the tragedy of the commons, described by Garrett Hardin in 1968as a situation where a number of herders graze cows on a commons. The herders each act independently in what they perceive to be their own rational self-interest, ultimately depleting their shared limited resource, even though it is clear that it is not in any herder's long-term interest for this to happen.
The event that first suggested the tyranny of small decisions to Kahn was the withdrawal of passenger railway services in Ithaca, New York. The railway was the only reliable way to get in and out of Ithaca. It provided services regardless of conditions, in fair weather and foul, during peak seasons and off-peak seasons. The local airline and bus company skimmed the traffic when conditions were favourable, leaving the trains to fill in when conditions were difficult. The railway service was eventually withdrawn, because the collective individual decisions made by travellers did not provide the railway with the revenue it needed to cover its incremental costs. According to Kahn, this suggests a hypothetical economic test of whether the service should have been withdrawn.
Suppose each person in the cities served were to ask himself how much he would have been willing to pledge regularly over some time period, say annually, by purchase of prepaid tickets, to keep rail passenger service available to his community. As long as the amount that he would have declared (to himself) would have exceeded what he actually paid on the period–and my own introspective experiment shows that it would–then to that extent the disappearance of the passenger service was an incident of market failure.
The failure to reflect the full value to passengers of keeping the railroad service available had its origins in the discrepancy between the time perception within which the travellers were operating, and the time perception within which the railroad was operating. The travellers were making many short term decisions, deciding each particular trip whether to go by the railroad, or whether to go instead by car, bus or the local airline. Based on the cumulative effects of these small decisions, the railroad was making one major long run decision, "virtually all-or-nothing and once-and-for-all"; whether to retain or abandon its passenger service. Taken one at a time, each small travel decision made individually by the travellers had a negligible impact on the survivability of the railroad. It would not have been rational for a traveller to consider the survival of the railroad imperilled by any one of his particular decisions.
The fact remains that each selection of x over y constitutes also a vote for eliminating the possibility thereafter of choosing y. If enough people vote for x, each time necessarily on the assumption that y will continue to be available, y may in fact disappear. And its disappearance may constitute a genuine deprivation, which customers might willingly have paid something to avoid. The only choice the market offered travellers to influence the longer-run decision of the railroad was thus shorter in its time perspective, and the sum total of our individual purchases of railroad tickets necessary added up to a smaller amount, than our actual combined interest in the continued availability of rail service. We were victims of the "tyranny of small decisions".
Thucydides (c. 460–c. 395 BC) stated:
[T]hey devote a very small fraction of time to the consideration of any public object, most of it to the prosecution of their own objects. Meanwhile each fancies that no harm will come to his neglect, that it is the business of somebody else to look after this or that for him; and so, by the same notion being entertained by all separately, the common cause imperceptibly decays.
Aristotle (384–322 BC) similarly argued against common goods of the polis of Athens:
For that which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual. For besides other considerations, everybody is more inclined to neglect the duty which he expects another to fulfill; as in families many attendants are often less useful than a few.
Thomas Mun (1571–1641), an English mercantilist, commented about decisions made with a myopic, small time perspective:
[T]hey search no further than the beginning of the work, which mis-informs their judgements, and leads them into error: For if we only behold the actions of the husbandman in the seed-time when he casteth away much good corn into the ground, we will rather account him a mad-man than a husbandman: but when we consider his labours in the harvest which is the end of his endeavours, we find the worth and plentiful increase of his actions.
Eugen von Böhm-Bawerk (1851–1914), an Austrian economist, observed that decisions made with small time perspectives can have a seductive quality:
It occurs frequently, I believe, that a person is faced with a choice between a present and a future satisfaction or dissatisfaction and that he decides in favor of lesser present pleasure even though he knows perfectly well, and is even explicitly aware at the moment he makes his choice, that the future disadvantage is the greater and that therefore his well-being, on the whole, suffers by reason of his choice. The "playboy" squanders his whole month's allowance in the first few days on frivolous dissipation. How clearly he anticipates his later embarrassment and deprivation! And yet he is unable to resist the temptations of the moment.
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In 1982, the estuarine ecologist, William Odum, published a paper where he extended the notion of the tyranny of small decisions to environmental issues. According to Odum, "much of the current confusion and distress surrounding environmental issues can be traced to decisions that were never consciously made, but simply resulted from a series of small decisions."
Odum cites, as an example, the marshlands along the coasts of Connecticut and Massachusetts. Between 1950 and 1970, almost 50 percent of these marshlands were destroyed. This was not purposely planned, and the public may well have supported preservation had they been asked. Instead, hundreds of small tracts of marshland were converted to other purposes through hundreds of small decisions, resulting in a major outcome without the overall issue ever being directly addressed.
Another example is the Florida Everglades. These have been threatened, not by a single unfavorable decision, but by many independent pin prick decisions, such as decisions to add this well, that drainage canal, one more retirement village, another roadway... No explicit decision was made to restrict the flow of surface water into the glades, or to encourage hot, destructive fires and intensify droughts, yet this has been the outcome.
With few exceptions, threatened and endangered species owe their predicament to series of small decisions. Polar bears, humpback whales and bald eagles have suffered from the cumulative effects of single decisions to overexploit or convert habitats. The removal, one by one, of green turtle nesting beaches for other uses parallels the decline in green turtle populations.
Cultural lake eutrophication is rarely the result of an intentional decision. Instead, lakes eutrophy gradually as a cumulative effect of small decisions; the addition of this domestic sewage outfall and then that industrial outfall, with a runoff that increases steadily as this housing development is added, then that highway and some more agricultural fields.The insidious effects of small decisions marches on; productive land turns to desert, groundwater resources are overexploited to the point where they can't recover, persistent pesticides are used and tropical forests are cleared without factoring in the cumulative consequences.
An obvious counter to the tyranny of small decisions is to develop and protect appropriate upper levels of decision making. Depending on the issue, decision-making may be appropriate at a local, state, country or global level. However, organisations at these levels can entangle themselves in their own bureaucracy and politics, assigning decisions by default back to the lower levels. Political and scientific systems can encourage small decisions by rewarding specific problems and solutions. It is usually easier and more politic to make decisions on individual tracts of land or single issues rather than implementing large-scale policies. The same pattern applies with academic science. Most scientists are more comfortable working on specific problems rather than systems. This reductionist tendency towards the small problems is reinforced in the way grant monies and academic tenure are assigned.
Odum advocates that at least some scientists should study systems so the negative consequences that result when many small decisions are made from a limited perspective can be avoided. There is a similar need for politicians and planners to understand large-scale perspectives. Environmental science teachers should include large-scale processes in their courses, with examples of the problems that decision making at inappropriate levels can introduce.
Rational choice theory, also known as theory of rational choice, choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. The basic premise of rational choice theory is that aggregate social behavior results from the behavior of individual actors, each of whom is making their individual decisions. The theory also focuses on the determinants of the individual choices. Rational choice theory then assumes that an individual has preferences among the available choice alternatives that allow them to state which option they prefer. These preferences are assumed to be complete and transitive. The rational agent is assumed to take account of available information, probabilities of events, and potential costs and benefits in determining preferences, and to act consistently in choosing the self-determined best choice of action. In simpler terms, this theory dictates that every person, even when carrying out the most mundane of tasks, perform their own personal cost and benefit analysis in order to determine whether the action is worth pursuing for the best possible outcome. And following this, a person will choose the optimum venture in every case. This could culminate in a student deciding on whether to attend a lecture or stay in bed, a shopper deciding to provide their own bag to avoid the five pence charge or even a voter deciding which candidate or party based on who will fulfill their needs the best on issues that have an impact on themselves especially.
In the social sciences, value theory involves various approaches that examine how, why, and to what degree humans value things and whether the object or subject of valuing is a person, idea, object, or anything else. Within philosophy, it is also known as ethics or axiology.
Satisficing is a decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met. The term satisficing, a portmanteau of satisfy and suffice, was introduced by Herbert A. Simon in 1956, although the concept was first posted in his 1947 book Administrative Behavior. Simon used satisficing to explain the behavior of decision makers under circumstances in which an optimal solution cannot be determined. He maintained that many natural problems are characterized by computational intractability or a lack of information, both of which preclude the use of mathematical optimization procedures. He observed in his Nobel Prize in Economics speech that "decision makers can satisfice either by finding optimum solutions for a simplified world, or by finding satisfactory solutions for a more realistic world. Neither approach, in general, dominates the other, and both have continued to co-exist in the world of management science".
Prospect theory is a theory of behavioral economics and behavioral finance that was developed by Daniel Kahneman and Amos Tversky in 1979. The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics.
In economics, time preference is the current relative valuation placed on receiving a good at an earlier date compared with receiving it at a later date.
In psychology, decision-making is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. Decision-making is the process of identifying and choosing alternatives based on the values, preferences and beliefs of the decision-maker. Every decision-making process produces a final choice, which may or may not prompt action.
The tyranny of the majority is an inherent weakness to majority rule in which the majority of an electorate pursues exclusively its own objectives at the expense of those of the minority factions. This results in oppression of minority groups comparable to that of a tyrant or despot, argued John Stuart Mill in his 1859 book On Liberty.
Decision theory is the study of an agent's choices. Decision theory can be broken into two branches: normative decision theory, which analyzes the outcomes of decisions or determines the optimal decisions given constraints and assumptions, and descriptive decision theory, which analyzes how agents actually make the decisions they do.
Policy analysis is a technique used in public administration to enable civil servants, activists, and others to examine and evaluate the available options to implement the goals of laws and elected officials. The process is also used in the administration of large organizations with complex policies. It has been defined as the process of "determining which of various policies will achieve a given set of goals in light of the relations between the policies and the goals."
Choice involves decision making. It can include judging the merits of multiple options and selecting one or more of them. One can make a choice between imagined options or between real options followed by the corresponding action. For example, a traveler might choose a route for a journey based on the preference of arriving at a given destination as soon as possible. The preferred route can then follow from information such as the length of each of the possible routes, traffic conditions, etc. The arrival at a choice can include more complex motivators such as cognition, instinct, and feeling.
An Informationcascade or informational cascade is a phenomenon described in behavioral economics and network theory in which a number of people make the same decision in a sequential fashion. It is similar to, but distinct from herd behavior.
Howard Thomas Odum, usually cited as H. T. Odum, was an American ecologist. He is known for his pioneering work on ecosystem ecology, and for his provocative proposals for additional laws of thermodynamics, informed by his work on general systems theory.
In economics, game theory, decision theory, and artificial intelligence, a rational agent is an agent that has clear preferences, models uncertainty via expected values of variables or functions of variables, and always chooses to perform the action with the optimal expected outcome for itself from among all feasible actions. A rational agent can be anything that makes decisions, typically a person, firm, machine, or software.
In game theory, folk theorems are a class of theorems describing an abundance of Nash equilibrium payoff profiles in repeated games. The original Folk Theorem concerned the payoffs of all the Nash equilibria of an infinitely repeated game. This result was called the Folk Theorem because it was widely known among game theorists in the 1950s, even though no one had published it. Friedman's (1971) Theorem concerns the payoffs of certain subgame-perfect Nash equilibria (SPE) of an infinitely repeated game, and so strengthens the original Folk Theorem by using a stronger equilibrium concept: subgame-perfect Nash equilibria rather than Nash equilibria.
The Allais paradox is a choice problem designed by Maurice Allais (1953) to show an inconsistency of actual observed choices with the predictions of expected utility theory.
The rational planning model is a model of the planning process involving a number of rational actions or steps. Taylor (1998) outlines five steps, as follows:
Overchoice or choice overload is a cognitive impairment in which people have a difficult time making a decision when faced with many options. The term was first introduced by Alvin Toffler in his 1970 book, Future Shock.
Sustainable consumer behavior is the sub discipline of consumer behavior that studies why and how consumers do or do not incorporate sustainability issues into their consumption behavior. Further, it studies the products that consumers select, how those products are used and how they are disposed of in pursuit of their individual sustainability goals.
Eldar Shafir is an American behavioral scientist, and the co-author of Scarcity: Why Having Too Little Means So Much. He is the Class of 1987 Professor in Behavioral Science and Public Policy; Professor of Psychology and Public Affairs at Princeton University Department of Psychology and the Woodrow Wilson School of Public and International Affairs.
Ecological rationality is a particular account of practical rationality, which in turn specifies the norms of rational action – what one ought to do in order to act rationally. The presently dominant account of practical rationality in the social and behavioral sciences such as economics and psychology, rational choice theory, maintains that practical rationality consists in making decisions in accordance with some fixed rules, irrespective of context. Ecological rationality, in contrast, claims that the rationality of a decision depends on the circumstances in which it takes place, so as to achieve one's goals in this particular context. What is considered rational under the rational choice account thus might not always be considered rational under the ecological rationality account. Overall, rational choice theory puts a premium on internal logical consistency whereas ecological rationality targets external performance in the world. The term ecologically rational is only etymologically similar to the biological science of ecology.