A1. This course discuss about rational and bounded rationality.
The news is about the Science Park Phase-3 development project, the high tech industrial park is located in the middle Taiwan, governed by the Central Taiwan Science Park. Near the science park is the important rice production area, and the wastewater from the park would possible effect the quality of the rice. The development of the science park has to pass the Environmental Impact Assessment (EIA). Environmental Committee in the Environmental Agency would make the final development decision for the EIA. I would examine the behavior of the members in the committee with the rationality and bounded rationality models.
1. Rationality model
The duty of the members in Environmental Committee is to make the final decision of the plan. They have the completely report, which is written by the experts followed the trusted standard procedures, about the economic forecast, ecological impact, and risk assessment. Also, during the EIA process the committee members would go the planned area and have different meetings with the local community, the developed companies, and the local government. The meetings would help the members approach to the particular situation of the park. This is a complete process for them to acquire all possible perspectives. In other words, the members considered themselves could make the optimize decision to decide this development plan. Finally, the decision is the conditional approval the plan.
2. Bounded rationality model
The environmental committee members made the decision by the information form the report, the field trip, and meetings. However, the future development would result some considerable changes in the current information. In the risk assessment, some new toxic chemical emission would be hard to assess because it could be the new technology and the effect on the health is still unknown. These chemical substances would accumulate in the body and strong response when the amount is over the threshold.
In the economic forecast, China has a rapid high technology park plan. This is a significant threaten for the economic benefit because China offers more attractive conditions for companies. To build a new factory would be faster in China than in Taiwan. The cost to operate is also lower in China. If the companies change their mind to build their manufactures in China, the Phase-3 development project would be a flat land in the middle Taiwan without buildings.
Therefore, the members are hard to add these future variables into the consideration. In other word, the decision is under the bounded knowledge and information, not in the optimized situation.
