Image Theory

Theoretical and Empirical Foundations

Lee Roy Beach

• Publisher: Routledge
• Year: 1998
• eBook ISBN: 9781135684471
• Topic: Business
• Subtopic: Management
• Index: Business

Decision making plays a major role in virtually every theory of organizational behavior. However, decision theory has not provided organizational theorists with useful descriptions of how decisions are made, either by individuals or by individuals in organizations. The earliest offering came from economics in the form of the "normative" rational view of decision making. The underlying presumption was that decision makers are all striving to maximize return or minimize loss, that decisions are based upon unlimited information, and that they have the capacity to use the information efficiently. They know the options open to them and the consequences of pursuing one or another of those options. The optimal course of action is revealed by applying the appropriate analysis and choosing the most profitable option. The key concepts are rationality, analysis, orderliness, and maximization, and even a moment's thought demonstrates the gap between these concepts and real-life experience. From the viewpoint of organizational theory, the primary problem with the normative view of decision making, and by analogy with much behavioral decision research, is its reliance on the "gamble metaphor." That is, decisions are characterized as gambles in an effort to capture the inherent risk. This metaphor has the advantage of simplicity, but it is a flawed simplicity.

This book is about a different kind of behavioral theory -- image theory. It is a psychological theory of decision making that abandons the gamble metaphor and the normative logic that the metaphor supports. Instead it sees decision making as guided by the beliefs and values that the decision maker, or a community of decision makers, holds to be relevant to the decision at hand. These beliefs and values dictate the goals of the decision. The point is to craft a course of action that will achieve these goals without interfering with the pursuit of other goals. The book begins with an overview of image theory that outlines the basic concepts of the theory and a little of its history. The next two parts correspond to the theory's two decision mechanisms, the compatibility test and the profitability test. The final section contains extensions and developments of the theory as well as cognate ideas that have their basis in the theory. This book's purpose is to provide -- in one place -- the theoretical and empirical work that has been done up to now and to suggest directions for future work.

PART ONE
AN INTRODUCTION TO IMAGE THEORY

The Basics of Image Theory

Lee Roy Beach

Terence R.Mitchell

Decision making is a complicated, messy process. Consider your own experience. A problem arises for which you have no immediate solution. You fret about it, ask friends and family for advice, toss and turn at night, make up your mind and then make it up again. Finally, it somehow becomes clear what you should do, or someone presses you to get on with things, or a deadline arrives, and you find yourself having made the decision—often defending it as the product of rational deliberation.

In the 1940s, when psychologists turned their attention to the systematic examination of decision making, they were daunted by the complexity and messiness of what they observed. To structure things, they turned first to two familiar models of decision making, which we refer to as normative models. A normative model purports to be the best available method for making a decision in the circumstances of interest.

The first model came from statistics and took Egon Brunswik’s notion of people as intuitive scientists at face value. Subjects were presented with statistical decision problems and their behavior was compared with what a statistician would do. They often did not do too well.

The second model came from economics. In 1954, Ward Edwards introduced psychologists to the basic concepts of microeconomics, proposing it as the appropriate model for all decision making. In most cases this consisted of some variation of maximization of subjective expected utility (SEU). The goal was to identify what was common in decisions across decision problems and decision makers, and to surmount the messiness of real-life decision making to arrive at an abstract universal theory.

It takes a great deal of sophistication not to take one’s theories too seriously. Normative models proved to be very seductive—they came from statistics and economics fully developed and mathematically beautiful. Probability and utility offered solid theories of preference and uncertainty, and SEU offered a way of summarizing the merits of an option, as well as supplying decision rules for selecting one option over another. They were in fact ready-made psychological theories.

This move from messiness to orderliness was compelling, but psychologists are empiricists and research results began to intrude. At first the idea was that even if the normative models were not wholly descriptive of decision behavior they were prescriptive, and decision makers could be trained to behave “correctly.” This idea still persists in some quarters. Later it was thought that the constructs of the normative models could be changed in light of empirical data to evolve a descriptive theory of decision making. This idea has prevailed for the last 40 years under the name of behavioral decision theory.

Of late, a new view has taken hold. Rather than beginning with the normative orderliness and working back toward real-world messiness, perhaps we are sufficiently mature in our understanding of decision making to begin with the messy and, guided by what we have learned in the past 40 years, begin to construct theory that is less rooted in normative ideas’ and more rooted in observed decision behavior. This view is called naturalistic decision theory, and it is still in its infancy. Image theory is the most thoroughly developed naturalistic theory (Klein, Orasanu, Calderwood, & Zsambok, 1993).

Naturalistic theory in general and image theory in specific grew out of the fact that for years there has been growing discontent with the normative approach to studying decision behavior. Reluctantly, behavioral researchers have recognized that decision makers’ behavior seldom resembles normative process or prescription (Hershey & Shoemaker, 1980). For instance, “the story of behavioral decision theory has been the growing realization that SEU often does not describe the decision making process. … The dramatic tension has been provided by SEU’s remarkable ability to hang on despite mounting doubts about its descriptive competence” (Fischhoff, Goitein, & Shapira, 1983, p. 185).

Although this discontent with the normative approach is based largely on experimental results (see Beach, 1996, 1997), it also is based on observations of professional decision makers making on-the-job decisions. As an example of the latter, Mintzberg (1975) observed business managers and found that most of their decisions involved only one option rather than multiple options, and the decision was whether to go with that option rather than a choice among competing options. Moreover, few decisions involved explicit balancing of costs and benefits, let alone explicit use of probability, two central components of traditional decision theory. Peters (1979) confirmed these observations and, in addition, observed that the criterion for decisions seldom was whether the change offered a maximal payoff. Rather, it was, “Does this option contain the thrust we want to see?” (p. 166). Peters agreed with Selznick’s (1957) conclusion that the decision-making manager primarily acts as a promoter and protector of the organization’s values rather than as a relentless seeker of maximal payoffs. In a similar vein, Donaldson and Lorsch’s (1983) ambitious study of 12 major corporations found that corporate managers do not strive to increase shareholder wealth; their first priority is the survival of the corporation itself. Moreover, strategic decisions strongly reflect the managers’ beliefs and their aspirations for their organizations, rather than just economic factors and analytic logic.

This state of affairs elicited two immediate responses from behavioral decision researchers. The first was to declare decision makers flawed and to insist that they learn to behave like the normative models prescribed. In my opinion, the substantive impact of this response has been minimal. The second was to modify the normative theory, usually by retaining the general maximization of expectation framework but adding psychological assumptions that make the theory more predictive of actual decision behavior. Kahneman and Tversky’s prospect theory (1979; Tversky & Kahneman, 1992) is an example of this response.

A more recent response has been to approach decision making as a branch of cognitive or social psychology (see Abelson & Levi, 1985), evolving descriptive theory from observations of real-life decision making. Image theory is part of this third response (Beach & Mitchell, 1987, 1990).

THE EVOLUTION OF IMAGE THEORY

In the midst of growing doubts about the efficacy of normative theory as a means of understanding decision behavior, we made our first attempt to broaden our own thinking about the nature of decision behavior. Our early work was encouraged by the appearance of a landmark paper by John Payne (1976), who demonstrated that decision makers use different decision strategies when faced with different decision tasks. Together with our own thinking (and introspections), Payne’s results suggested that decision makers possess a repertory of decision strategies and that the strategy they select from that repertory depends on the characteristics of the task and of the environment in which the task is embedded. The result of this line of thought was the decision strategy selection model (Beach & Mitchell, this volume), which is described in Part III of this book.

We began a research program to test the strategy selection model, and the results were generally supportive. Of prime importance was the work of Jay Christensen-Szalanski (this volume), who formalized our ideas and made them amenable to empirical test. In fact, Jay’s work did two things: It made the meta-decision model explicit (strategy selection was based on SEU) and generalized the strategy selection model from decision making in specific to problem solving in general. For those researchers who persist in the belief that maximization of expected utility is the sine qua non of rationality, Jay ironically pointed out that the strategy selection model allowed a decision maker to rationally (SEU) select an irrational decision strategy (e.g., consulting a fortune teller) from his or her repertory of strategies.

We never were wholly satisfied with the strategy selection model. From the beginning it seemed too limited. Despite the supportive research results, we had the uneasy feeling that neither the model nor the research were wholly compatible with what our introspection and observation told us. It was this uneasiness that motivated the formulation of image theory. So, before we discuss image theory itself, let us describe the three things that made us so uneasy.

First, some decision strategies are used considerably less often than others. Specifically, formal analytic strategies of the normative variety are seldom used, even by people who are trained to use them. Moreover, on those rare occasions when sophisticated people use analytic models, they seldom accept results that are counter to their intuition (Isenberg, 1984). In fact, very simple strategies sometimes turn out to be as accurate or even more accurate than analytic strategies (Hammond, Hamm, Grassia, & Pearson, 1987; Payne, Bettman, & Johnson, 1994). Analytic strategies require a great deal of concentration, time, effort, and skill and few decisions are worth all that. Moreover, even for very important decisions the formal strategies often seem too coldly intellectual (deciding to get married or to have a child). Instead, most times, most people, for most problems use some sort of simple, easy, rapid nonanalytic process.

The second thing that bothered us was our realization that all choice strategies are designed solely for identifying the “best” option in a set of plausible options—called the choice set. Indeed, most choice strategies use a form of the maximization decision rule and maximization requires comparisons among members of a circumscribed set of options. This left us with the question of how that set of plausible options comes to exist in the first place. Clearly, the mechanism that governs admission to the choice set plays a major role in determining the eventual decision. Granting this, what are the implications when that mechanism produces a set with only one option in it—does maximization even come into play? What if there is only one option to start with—as Mintzberg (1975) observed. What happens in terms of maximizing if that one option is admitted to the choice set and what happens if it is not.

Surely the mechanism that determines admission to the choice set is somehow more fundamental to decision making than one that merely selects the best option from that set. This is especially obvious when only one option is admitted, either because there was only one to begin with and it made it into the choice set or because only one of a number made it. In this circumstance the single option is by definition the “best” and this must be the end of the decision process; balancing pros and cons, maximization, and all the rest need not come into it at all. Both in this case, and in the more familiar case in which two or more options have been admitted to the set, the admission mechanism de facto is the fundamental decision mechanism because everything that follows is contingent on what it does. Moreover, it apparently admits, or rejects, each option independently of the other potential options. This follows from the fact that the decision maker sometimes finds that none of the options are admissible, thus producing an empty choice set. If admission were based on relative merit there would never be a failure to choose because the best of even bad options would be admitted.

The third thing that bothered us arose from the frequently heard explanation, “I was trying to do the right thing.” That is, decision makers often choose “right” options that clearly are not in their best interests and they often reject “wrong” options that an observer might judge to be very attractive. In short, decision making is strongly shaped by beliefs, morals, ethics, and social conventions, which we refer to collectively as principles. They function as guiding imperatives.

Social scientists appear to be embarrassed by the fact that they and others have principles that serve as standards against which they test their own behavior and the behavior of others. But, if you listen to even the most casual conversation, you find it to be full of judgments and opinions that reflect the power and centrality of principles. (Of late the lone voice on this topic, albeit a loud voice, is Amitai Etzioni, 1988, who has argued for a reformulation of economics to reflect moral imperatives. Michael Lewis’, 1992, work on the behavioral implications of principles, shame and the anticipation of shame, ties to the work of Etzioni and to image theory.)

In light of our thinking about these three bothersome issues, and in light of our doubts about the generality of the strategy selection model, we actively tried to make ourselves think outside the box of accepted lore about decision making. With the help of Kenneth Rediker, who was a graduate student at the time, we held weekly think-sessions in which we chased ideas. Slowly, we began to see a structure to what we were thinking, and we began to write small essays trying to pin down our ideas. These essays eventuated in our first attempt to go public (Mitchell, Rediker, & Beach, 1986). The paper was published in a book on organizations (Sims & Gioia, 1986) to which Terry Mitchell had been invited to submit a chapter, so we had to skew things in that direction. Oddly enough, although we quickly returned to individual decision making, that first paper presaged what later became the extension of image theory to organizational culture and organizational decision making (Weatherly & Beach, this volume).

After that first publication things got tough. American journal reviewers were reluctant to publish our work; we did much better in Europe (e.g., Beach & Mitchell, 1987; Beach & Strom, this volume). To get around this, we decided to put our ideas, and our research, in a book, but we could not find an American publisher. Finally, Britain’s Wiley Ltd. took the risk. The book, Image Theory: Decision Making in Personal and Organizational Contexts (1990) ended up being written by Lee Beach because Terry Mitchell was committed elsewhere, but plural pronouns are used throughout to reflect the joint thinking that went into it.

Of course, success begets success, and as soon as we started obtaining supporting evidence the resistance to publishing our work evaporated. Indeed, Organizational Behavior and Human Decision Processes became the primary outlet, and most of the empirical work has appeared in its pages. We sincerely thank its editors and reviewers for their receptiveness. But, recognizing that nothing is less appetizing than someone else’s warmed-over nostalgia, we will stop reminiscing and get on with the story.

We frequently have noted (Beach, 1990; Beach & Mitchell, 1996; Beach, Mitchell, Paluchowski, & van Zee, 1992) the odd way in which theories evolve. Observation and experience lead to a rather simple set of notions that, when they are written down, become more abstract and circumlocutious than could ever have been imagined. Further effort to be precise and to tie the theory to existing literature, as well as to make it testable, leads to increasingly opaque formalism. Soon, what at first seemed to be just good sense becomes so stilted and solemn that even the theorists can hardly detect its humble beginnings. The reader, of course, only sees the final product. His or her task is to decode the formalisms in an effort to tie the theory to something he or she has actually experienced. Often this is such a formidable task that things go wrong— and the theorists lament that their simple ideas are being misinterpreted and distorted.

Therefore, in an effort to make the reader’s task easier and to reduce our future anguish, we often break the rules. We do the decoding ourselves by presenting an informal version of the theory prior to presenting the formal version. What follows is, as close as we can recall, the essence of the simple notions that gave rise to image theory—the ideas we had in those weekly think-sessions when we were just having fun. Of course, there is a reason why we later put work into the formal version of the theory—we can defend the formal version more precisely and we are willing to submit it to empirical test. The informal version is just that, informal. Perhaps, however, it will help the reader understand the formal version a little more easily.

THE INFORMAL VERSION OF IMAGE THEORY

In the image theory view, the decision maker is an individual acting alone. Of course, most decisions are in fact made in concert with others, be it a spouse, a friend, a business colleague, or whomever. But, even so, the decision maker has to make up his or her own mind and then differences of opinion must be resolved in some manner that depends on the dynamic of the group. That is, image theory does not regard groups as capable of making decisions; they are the contexts within which individual members’ decisions become consolidated to form a group product (Beach, 1990; Beach & Mitchell, 1990; Davis, 1992). As a result, image theory focuses on the individual making up his or her own mind, with the presumption that the result may later be changed or overridden when presented to others.

Each decision maker is seen as possessing values, morals, ethics and so on that define for him or her how things should be and how people ought to behave. This involves such old-fashioned concepts as honor, ethics, and ideals as well as standards of equality, justice, loyalty, stewardship, truth, beauty, and goodness, together with moral, civic, and religious precepts and responsibilities. Collectively these are called principles and they are “selfevident truths” about what the decision maker (or the group to which he or she belongs) stands for. They help determine the goals that are therefore worthy of pursuit, and what are and what are not acceptable ways of pursuing those goals. Often these principles cannot be readily articulated, but they are powerful influences on decisions.

Principles run the gamut from the general (“Everyone should strive to be self-sufficient”) to the specific (“I must treat my students as responsible persons”), from the compelling (“I must abide by the Ten Commandments”) to the trivial (“It is not good to slurp one’s soup”). As Freud tried to tell us, principles are not all especially admirable or rational; greed may be as compelling as altruism, lying may recommend itself as much as honesty.

Whatever one’s principles may be, they are the foundation of one’s decisions: potential goals and actions must not contradict them or those goals and actions will be deemed unacceptable. Moreover, the utility of decision outcomes derives from the degree to which they conform to and satisfy the decision maker’s values. That is, it is customary to think of d...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• List of Contributors
• Preface
• Part One: An Introduction to Image Theory
• Part Two: The Compatibility Test: Screening and Progress Decisions
• Part Three: The Profitability Test: Choice
• Part Four: New Developments and New Directions
• Part Five: Conclusion