Skip Navigation Planning & Markets
Subscribe Submission Requirements Editorial Board Archive Links Search Home

II. Background

The theoretical basis for interpreting planning behavior is utility theory. Planning is defined here as a sequence of information gathering activities to reduce different kinds of uncertainties (Hopkins, 1981), and to solve problems encountered by planners to improve decision making by coordinating related decisions in time and space based on such information. The results from these activities could be either plans (or sets of decisions) or no action, depending on whether planning yields benefit. A plan is a set of related, contingent decisions taking into account these uncertainties (e.g., Hopkins, 1981; Schaeffer and Hopkins, 1987). Though planning is not equivalent to decision making as argued earlier, from a normative point of view, both are problem solving activities, and therefore their theoretical underpinnings must share some commonality.

A more comprehensive understanding of planning begs a long research agenda. Without pretending to provide such an agenda, the research is aimed at addressing planning in a narrower context. The interpretation presented here is thus based on normative decision theories because these theories prescribe how people make decisions and are deductively justified (e.g., utility theory in Savage, 1972; von Neumann and Morgenstern, 1947). I am, therefore, interested in how planning should take place, rather than how planning does take place, for the decision maker. In the simplest terms, decision making selects from a set of the best alternative that maximizes expected utility, while plan making coordinates a set of contingent decisions so that making plans yields benefits.

A planner is a person who makes plans and acts accordingly. The descriptive aspects of planning are, of course, relevant and need future work. Similar attempts have been made to describe planning behavior for planners (e.g., Knaap, Hopkins and Donaghy, 1998; Schaeffer and Hopkins, 1987). The approach taken here considers how information structures should be searched yielding the maximum expected utility or payoff. The interpretation will be based mainly on Marschak and Radner’s and Savage's choice theory under uncertainty (1978; 1972). I focus here on a simplified planning situation consisting of a unitary group of planners and the environment, or the grand world and the corresponding small worlds (in Savage's language), in which events occur. The unitary group also makes collective decisions as will be introduced shortly.

To simplify, I call such a group a planner. In Savage's choice theory, a sequence of assumptions and postulates are made to derive, for an idealized person or for that matter a coherent group, personalistic probability and utility in making choices among acts under uncertainty. These assumptions and postulates are the substance of rationality.

Savage introduces the notions of 'small worlds' and the 'grand world' and the decision maker is to choose the best act in a small world. The concept of small worlds provides a useful way for describing the logic of planning. For example, a small world consists of a set of states or descriptions about the world, and the actions available to the decision maker with the associated consequences given each state. A small world is, in a sense, the cognitive representation of the problem that the decision maker is to solve.

Events are subsets of the set of states. Personalistic probabilities are assigned to these events. In the planning context, small worlds are the planner's perspectives about planning problems. The planner makes decisions in his or her own small worlds which are defined in the grand world. The planner makes plans and then act accordingly, reminiscent of orders sent from the observer to the actor in a two-person team (Marschak, 1974), except that the observer and the actor are the same person in the unitary organization case. In following these plans, the planner chooses among the alternative actions suggested by the plans to solve problems. The planner could revise these plans if unexpected events occur. All such planning activities can be described in terms of primitives as will be discussed in more detail. Most of these primitives are defined rigorously by Savage (1972). I introduce them here in the context of planning.

page 33


USC Seal

Main Page | Subscribe | Submission Requirements | Editorial Board | Archive | Links

ISSN 1548-6036

Copyright 1999-2000
University of Southern California
Los Angeles, California 90089-0626