Models for decision-making in the public sector

The public sector is composed of a heterogeneous selection of undertakings which, for a variety of economic, political and historic reasons, are under direct government control. The considerable differences between these undertakings, combined with a paucity of common characteristics, has resulted in a variety of decision-making techniques being employed. In many cases there is an affinity with private sector firms, and techniques technically akin to the profit maximisation model are adopted although social welfare considerations supplant notions of financial returns. As with the private sector, textbook models are frequently abandoned to make way for more pragmatic criteria when informational or computational problems become severe. Additional to these undertakings using techniques parallel to those of the private sector, there are others for which specific decision-making models have been developed. These are mainly in areas where effective demand is considered inappropriate as a method of allocation and appraisal. Finally, there is some evidence that, as the multi-dimensional nature of public sector decisions becomes more widely accepted, the notion of satisficing is gradually gaining acceptance replacing that of maximising.