Political institutions in turbulent macroeconomic contexts: Types of uncertainty and decision-making dynamics

The recent succession of economic, financial, health and military crises in the first two decades of the new Millennium has reminded us that the world is mostly unpredictable and that political institutions are crucial actors in shaping how our societies cope with those challenges.Nevertheless, policy makers face uncertainty more often than risk when choosing and designing policies and countermeasures. Indeed, organizational literature has pointed out long ago that uncertainty is one of the most relevant problems for organizations and that it can affect organizational decision-making in a variety of ways.This article argues for the existence of different kinds of uncertainty and for the need to analytically differentiate among them because of their different impact on organizational wrongdoing. To this end, the article proposes a typology of four types of uncertainty: routine, information uncertainty, ambiguity, and indeterminacy. The typology is based on two analytical dimensions: the kind of data available to the decision-makers at the time of the decision (data of high or low equivocality) and the frame used to interpret those data (a frame that can be shared or not among decision-makers).By relying on transcripts of the meetings of the Federal Open Market Committee (FOMC) of the Federal Reserve (FED), the article analyses three monetary policy decisions during the Bernanke’s chairmanship (2006-2014). The analysis shows that different types of uncertainty favor the emergence of peculiar decision-making dynamics, especially regarding the type of interactions among decision makers (debate vs. dispute) and the role of power in the decision process.