On the Economic Approach to Institutional Organization
Chapter 6: Modeling Motivation and Cognition in Organizational Economics: Research Heuristics or the Portrayal of ‘Human Nature as We Know It’?
The behavioral assumptions I invoke . . . are bounded rationality and opportunism. Both are intended as concessions to ‘human nature as we know it’. Admittedly, the resulting conception of human nature is stark and rather jaundiced. (Williamson, 1985, pp. xii–xiii) [T]he more general principles of analytic economics are simply the principles of economic behavior, of the effective achievement of ends by use of means, by individuals and groups, irrespective of social and political forms. Even under a ‘pharaoh’, combining absolute sovereignty with outright ownership of men themselves as well as the land and goods, much the same choices and decisions would have to be made to make activity effective rather than wasteful and futile; and the abstract principles of economy and of organization are the same regardless of who makes the choices or what means and techniques are employed or what ends are pursued. (Knight, 1948, p. li) The key thesis explored in this chapter is that (organizational) economics only heuristically applies the model of economic man, that is, ideas on selfinterested, utility-maximizing choice behavior. Understood as research heuristics, these ideas imply abstraction from behavioral complexities that characterize motivation and decision-making in ‘real life’. Following this line of argument, ‘economic man’ is beyond empirical–behavioral and moral–behavioral scrutiny (but not so theory and practical intervention that is developed by applying the model of economic man). Sections 6.1, 6.2 and 6.3 assess how Taylor, Simon and Williamson modeled motivational and cognitive aspects of decision-making. If the argument holds up that...
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