Maximisation models are based on the assumption of rational individuals maximising utility. This is a vast literature
dating back more than a century to the foundations of modern economic thought and utilitarianism (e.g. Mill 1863). It
16/30 is beyond the scope of this guidance to comprehensively discuss developments in this field, however we can present
several classifications of this literature relevant for CCVIA. A general level, theoretical assumptions differentiate how
an actor's cognitive capacities to obtain and process information are characterised. Predicting behaviour is most easily
done under the conditions of independent decision, in which individuals are assumed to be rational, perfect
maximisers, in the sense that they have complete information and are able to calculate outcomes for all contingencies,
and optimize utility. This is referred to as maximisation (Cooke et al. 2009). While utility optimization approaches are
used widely, they has been criticised for making unrealistic assumptions. Knowledge is often not freely available, and
the limitations of human cognitive capacities are well-documented (van den Bergh et al. 2000). Further well-known
cognitive biases exist. Bounded rationality relaxes the assumptions of utility optimisation, and aims to predict
behaviour based on, for example, heuristics or rules of thumb, which are simple rules that achieve an approximately
optimal outcome (Kahneman et al. 1982). Bounded rationality suggests that people engage in a mental search of
available options, and choose the first one that is satisfactory (Simon 1956). This so-called satisficing is different from
optimizing in that it involves comparing not the outcomes of different choice options, but of each choice option with a
set of minimum criteria. Closely linked to bounded rationality is the concept of adaptive heuristics: people develop
and use mental shortcuts to identify acceptable options quickly, with a minimal amount of necessary information
(Payne et al. 1993).
Finally, if individual decisions are not independent but rather contingent upon the decisions of others then game
theory may be applied. Either utility maximisation or bounded rationality approaches are compatible with game theory.
For instance, actors may use heuristics to solve game theoretical problems that occur in group situations.
Alternatively, utility maximisation assumptions can be considered in a game theoretical framework.
Exemplary methods and tools
| Name | Description | References
|
| Linear programming model
| Rounsevell et al. (2003) apply a linear programming model to address the question of how crop rotations vary between location. The model inputs costs and benefits of crop types and time constraints. The results predict how rotations vary between locations subject to farmers maximizing profit.
| Rounsevell M, Annetts J, Audsley E, Mayr T, Reginster I. 2003. Modelling the spatial distribution of agricultural land use at the regional scale. Agriculture, Ecosystems & Environment 95: 465-479.
|
