ABSTRACT

Incrementalism has applied the concept of bounded rationality to explain policy and budget processes. Human decision-making processes especially under institutional settings are featured by bounded rationality and institutional frictions. Bounded rationality and institutional frictions will lead to policy gridlock or stability according to incrementalism. Probably, one of the most influential theories of decision-making mechanisms is "the model of satisficing man" developed by Herbert Simon. Decision makers are usually bounded by the limit in their cognitive and analytical capabilities. According to Simon, there are several "decision maker" models. The psychological model focuses on the affective or emotional aspect of individual decision maker. Padgett's theory of serial judgment significantly clarified confusions over the incrementalist model, especially the second part in the right-hand side of equation. Disproportionate information-processing theory can be regarded as the most comprehensive theory of decision making under institutional settings. In contrast to proportionate information processing, disproportionate information-processing theory clarifies the puzzles in the policy and budget literature.