1. News item about an event in which the actions of a firm or governmental agency play a crucial role.
In Costa Rica, the Environment Ministry put a temporary ban on the thermal processing of solid waste for energy. The temporary ban was well-received by a citizen group that is concerned about the risks to health and the environment. The decree bans the waste combustion electricity generation operation until the technical and scientific studies prove that the process does not harm human health and the environment. National Association of Municipalities (ANAI) filed a complaint to the court because it claims that the moratorium violates the freedom to energy trade.
Source of news: Citizen group voices support for government moratorium on thermal conversion of solid waste to electricity: Tico Times, 01/10/2014
Why the action might be the result of rational decision making?
The moratorium might be resulted from rational because at this stage it is the most optimised option. There could have been three options in this decision making process. Besides a moratorium, granting or denying the operation of trash combustion are also options. When considering these three options, the decision maker needs to decide which option maximises the benefits.
According to the news, the Environment Ministry requires studies to demonstrate the certainty of no harm to health and environment before granting the thermal conversion approval. It can be interpreted as the information that the government possesses at this point was not sufficient to prove that the waste combustion could satisfy the criteria of health and the environment. Therefore the outcome of this option cannot be predicted with confidence yet.
On the other hand, to completely reject the option of waste combustion could also miss the opportunity of generating economic source and resolve the solid waste handling issues because of the the uncertainty of the operation satisfying the health and environmental criteria has not been proven yet.
Therefore, the current decision to temporarily ban the waste combustion for electricity might be the most optimised option for now because it allows more time for communication over the pros and cons between stakeholders. With more information being made available, the decisions might be changed again later.
Write an alternative, equally plausible account, showing how these actions might result from a boundedly rational organisation (à la Jones 2003).
In Costa Rica, the Environment Ministry put a temporary ban on the thermal processing of solid waste for energy. The temporary ban was well-received by a citizen group that is concerned about the risks to health and the environment. The decree bans the waste combustion electricity generation operation until the technical and scientific studies prove that the process does not harm human health and the environment. National Association of Municipalities (ANAI) filed a complaint to the court because it claims that the moratorium violates the freedom to energy trade.
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| Municipal authorities have a garbage problem, and they hope gasification will be a solution. Lindy Drew/The Tico Times |
Why the action might be the result of rational decision making?
The moratorium might be resulted from rational because at this stage it is the most optimised option. There could have been three options in this decision making process. Besides a moratorium, granting or denying the operation of trash combustion are also options. When considering these three options, the decision maker needs to decide which option maximises the benefits.
According to the news, the Environment Ministry requires studies to demonstrate the certainty of no harm to health and environment before granting the thermal conversion approval. It can be interpreted as the information that the government possesses at this point was not sufficient to prove that the waste combustion could satisfy the criteria of health and the environment. Therefore the outcome of this option cannot be predicted with confidence yet.
On the other hand, to completely reject the option of waste combustion could also miss the opportunity of generating economic source and resolve the solid waste handling issues because of the the uncertainty of the operation satisfying the health and environmental criteria has not been proven yet.
Therefore, the current decision to temporarily ban the waste combustion for electricity might be the most optimised option for now because it allows more time for communication over the pros and cons between stakeholders. With more information being made available, the decisions might be changed again later.
Write an alternative, equally plausible account, showing how these actions might result from a boundedly rational organisation (à la Jones 2003).
The reason why the moratorium might be resulted from a boundedly rational organisation are given as following. The four principles of bounded rationality that Jones reviewed in the 2003 paper can be reasonably linked to the decision made by the Environment Ministry. The goals are clearly defined as the proposed waste combustion are to handle the waste and generate electricity. However, the potential consequences of the combustion residue cause concerns on risks on human health and environment, which could arouse emotions for local residents. This non-logical thought could interfere with decision making process and bound the rationality of the organisation. This combination of goal-oriented thinking and the non-logical thought can be seen as the organisation's behaviour following the principle of intended rationality.
For principle of adaptation, Jones quoted Kulklinski and Quirk on how members of organisations shape their thoughts to adapt to the tasks. In this case, the government agency is allowing the data to shape interferences and therefore fits the description of the central processing organisation. The uncertainty of the consequences in the waste combustion project also reverberates through the debates. The potential harm of the waste combustion forms the main uncertainty in this case and impacts the decision made by the organisation.
Finally, the principle of trade-offs can be seen in this case. Jones' paper addresses the difficulty for human to make decisions when encountering multiple goals. In this case, profits generated from selling the electricity generated by the electricity along with the waste handling solution are weighed against the potential harms from the waste combustion.
For principle of adaptation, Jones quoted Kulklinski and Quirk on how members of organisations shape their thoughts to adapt to the tasks. In this case, the government agency is allowing the data to shape interferences and therefore fits the description of the central processing organisation. The uncertainty of the consequences in the waste combustion project also reverberates through the debates. The potential harm of the waste combustion forms the main uncertainty in this case and impacts the decision made by the organisation.
Finally, the principle of trade-offs can be seen in this case. Jones' paper addresses the difficulty for human to make decisions when encountering multiple goals. In this case, profits generated from selling the electricity generated by the electricity along with the waste handling solution are weighed against the potential harms from the waste combustion.
Dear Sho,
ReplyDeleteThe news item you chose seems to me very good for applying the theory from Jones, and it also has a good relationship with industrial ecology.
I would like to compliment on your good use of the literature provided. Addressing the different elements of the theory laid out by Jones in different paragraphs that start with a short explanation really makes the blog very understandable and informative.
I find it good that you note at the beginning of the second paragraph that with rational decision making there has to be chosen for the decision that optimizes benefits. And you also show a good interpretation of the theory on rational decision making, saying that the government did not possess enough information and they found it worth the costs of information gathering to gain more information before making a final decision. I completely agree on your analysis of decision making in this news item so far.
Your application of the theory of adaption and trade-offs to your news-item is also really good and I agree with the conclusions you make. However, in the first paragraph of your discussion of the bounded rationality in this decision, I think I don’t completely understand what you’re trying to say. In my opinion risks on the environment and human health are not just part of emotional decision making. They can be just as much a goal for the government as handling waste and generating electricity. Therefor I don’t think wanting to reduce the risks on the environment and human health is the result of a bounded rational decision. I find it a completely rational decision, also because the government without a doubt has a lot of information on possible environmental and health risks and takes that into account when weighing the benefits of a decision.
I therefore would like to ask you how you came to the conclusion that this is a part of bounded rational decision making?
I hope you will find my feedback useful,
kind regards,
Ilonka Marselis