Instrumental and Value Rationality of the

Self-regulation Model of Decision-Making

Alexander M. Yemelyanov1(&) and Inna S. Bedny2

1
College of Business and Computing, Georgia Southwestern State University,
800 Georgia Southwestern State University Drive, Americus, GA 31709, USA
Alexander.Yemelyanov@gsw.edu
2
Evolute, LLC, Wayne, NJ, USA
innabedny@gmail.com

Abstract. This paper offers further development of the self-regulation model of

decision-making, which is based on the self-regulation model of the thinking
process developed within the framework of the systemic-structural activity
theory (SSAT). The role of instrumental and value rationality in decision-
making under uncertainty is described. In this paper, we further specify the role
of the factors of significance and difficulty in the self-regulation process of
decision-making by considering the energy and information component of these
factors, along with the instrumental (processing) and value rationality related to
them. Eight core energy- and information-based shaping factors that regulate
instrumental and value rationality are presented.

Keywords: Systemic-structural activity theory
Decision making under

uncertainty
Self-regulation model
Instrumental and value rationality

Bounded rationality
Shaping factors of instrumental and value rationality

1 Instrumental and Value Rationalities in Reasoning

When people use normative models in decision-making, they often consider them-
selves to be procedurally rational, and they associate their errors only with the violation
of value rationality. This is why optimization models built on the basis of the Expected
Utility Theory (EUT) are widely used when we judge business rationality [1]. We are
accustomed to these models to such an extent that when expanding their application to
a wider range of problems, we often forget that processing (instrumental) rationality in
decision-making becomes a determining factor when a problem is considered under
conditions of uncertainty, therefore becoming poorly structured. Attempts to establish
procedural rationality, which is information-based and energy-based in the framework
of value rationality, leads to the issue of our behavior becoming irrational within the
framework of the mathematical model used, which in turn loses its predictive accuracy.
Max Weber [2] coined “instrumental” and “value rationality” for two different kinds
of human reasoning. Social action, like all types of action, may be…: (1) instrumentally
rational—that is, it is determined by expectations for the behavior of other human beings
and objects in the environment. These expectations are used as “conditions” or “means”
for the attainment of the individual’s own rationally-pursued and calculated ends;

© The Editor(s) (if applicable) and The Author(s), under exclusive license
to Springer Nature Switzerland AG 2021
H. Ayaz and U. Asgher (Eds.): AHFE 2020, AISC 1201, pp. 199–206, 2021.
https://doi.org/10.1007/978-3-030-51041-1_27
200 A. M. Yemelyanov and I. S. Bedny

(2) value-rational—in other words, the action is determined by a conscious belief in its
value, which is based on some ethical, aesthetic, belief-driven, or other form of
behavior, independent of its potential for success. Weber emphasized that it is highly
unusual to find only one of these orientations, since combinations are usually the norm.
Robert Nozick [3] also accepted the idea of Weber’s two kinds of rationality.
However, he indicated the dominant role of instrumental rationality. He highlighted the
prominence of instrumental rationality as “the means-ends connection” and “the effi-
cient and effective achieving of goals,” though he did accept the traditional suggestion
that instrumental rationality is incomplete because it is value-free.
By this logic, there are two kinds of human reasoning (rationality): instrumental
and value, where the leading role belongs to instrumental rationality. In essence,
instrumental rationality relates to achieving a goal, while value rationality is tied to the
goal’s particular value (epistemic, moral, ethical, etc.). Value rationality is determined
by a wholly conscious belief in the value of the goal based on some ethical, aesthetic,
belief-driven, or other form of behavior or consideration, independent of its potential
for success. Instrumental rationality can be either conscious or unconscious.

2 Study of Rationality in Decision-Making

In medical research [4], the most meaningful analysis of rationality in decision-making

relates to solving the question of how rational decisions are made during doctor-patient
encounters. Doctors’ subjective decisions in medicine are the leading cause of patients’
deaths. In medicine, the most dominant normative theory is EUT, which is based on
mathematical axioms of rationality. According to these axioms, rational choice is
associated with the selection of an alternative with higher expected utility (expected
utility is the average of all possible results weighted by their corresponding proba-
bilities). Rational choice is traditionally based on the core concepts of Bayesian
probability calculus (for example, in hematology and oncology). Rationality is usually
classified under the umbrella of normative and descriptive theories of decision‐making.
Normative theories include epistemic theories, which direct the practice of evidence-
based medicine, and expected utility theory, which provides the basis for widely used
clinical decision analyses. Descriptive theories of rationality include argumentative
theory of reasoning, adaptive rationality, dual processing model of rationality, regret‐
based rationality, etc.
The following five core principles of rationality across different theoretical models
have been identified [4]: (1) benefits (gains), harms (losses), goals; (2) conditions of
uncertainty; (3) human cognitive architecture of “old mind” (affect‐based, intuitive,
fast, and resource‐frugal) and “new mind” (analytic and deliberative, consequential
driven, and effortful); (4) context with constraints of human brains (epistemological,
environmental, and computational); (5) ethics and morality, including utilization
(social-oriented), duty-bound (individual oriented), and the right‐based ethics (auton-
omy, “no decision about me, without me”).
It should be noted that these core factors depend on the context of situations and are
only related to value rationality. Authors have argued that what is considered conven-
tionally “rational” behavior under one rationality theory may very well be considered
Instrumental and Value Rationality of the Self-Regulation Model of Decision-Making 201

irrational under another theory. Furthermore, no one model of rationality can possibly fit
all contexts. Thus, under the conditions of applying EUT, the instrumental rationality of
decision-making is already predetermined by the choice of the weighted formula, while
value rationality (which depends on the context) determines the rationality of the entire
decision. This is true only for well-defined, quantitatively-formulated problems,
including problems associated with economic risk, in which the goal of the choice and
the criteria of success are determined in advance. For the majority of ill-defined prob-
lems, in which there is pronounced qualitative uncertainty, the rationality of choice is
determined by both the evaluative and the processing (instrumental) parts of it, and
instrumental rationality plays an integral role. Therefore, we only agree that no one
model of value rationality can fit all contexts, but we also disagree with the statement
that “no one model of rationality can fit all contexts.” This type of rationality is
determined by the instrumental rationality of the model of self-regulation, which is
inherently limited by an individual’s capabilities as well as the conditions of the problem
they are solving.

3 Instrumental and Value Rationality of Decision-Making

Under Risk

D. Kahneman and A. Tversky [5] suggested prospect theory: a behavioral-economic

theory that describes the way in which people choose between probabilistic alternatives
that involve risk. As an illustration of this theory, let us analyze the following decision-
making problem in a hypothetical life and death situation presented in [6] (see also its
discussion in [7]).
Participants were asked to choose between two alternative programs to combat an
unusual Asian disease, which is expected to kill 600 people. This decision-making
problem was presented to participants either with positive framing (survival format),
i.e. how many people would live, or with negative framing (mortality format), i.e. how
many people would die. Results are presented below in the form of prospects (the
percentage who chose each option is indicated in parentheses).
Positive framing:
If Program A is adopted, 200 people will be saved. (72%)
If Program B is adopted, there is a 1/3 probability that 600 people will be saved and
2/3 probability that no people will be saved. (28%).
Negative framing:
If Program C is adopted 400 people will die. (22%)
If Program D is adopted, there is 1/3 probability that nobody will die and 2/3
probability that 600 will die. (78%)
Authors claim that positive and negative framing result in different descriptions of
the same problem, while in reality, programs C and D are indistinguishable in real
terms from programs A and B. At the same time, experimental results show that most
participants chose programs A and D, despite the fact that in terms of consequences,
these choices are contradictory. This is a violation of the logical principle of exten-
sionality in decision-making, which states that making a decision in a problem should
202 A. M. Yemelyanov and I. S. Bedny

not be affected by how the problem is described [8]. Authors admitted the fallacy of
such a choice, explaining it in terms of the general properties of people’s attitudes
towards a risk: people are expected to show a risk-seeking preference when faced with
negatively-framed problems and risk aversion when presented with positively-framed
ones. In reality, in the analysis of the Asian disease, participants made decisions in two
different problems with two different goals: Problem 1 (positive framing) has one
specific goal – “save all 600 lives” and Problem 2 (negative framing) has another
specific goal – “do not allow any living patient out of 600 to die.” Considering this,
program B’s motivation was to “save lives,” which is primarily associated with the
medicinal effects of treatment meant to combat a disease, while program D’s moti-
vation was to “prevent loss,” which is often associated with prophylactic measures to
prevent illness. This conclusion is also associated with the fact that the given infor-
mation regarding survivors is typically present in programs regarding treatment, while
information regarding the deceased is generally found in programs related to preventive
measures. It should be noted that prospect theory is a rational theory for decision-
making under risk. Its instrumental part uses linear optimization to find the best
decision in well-defined problems.

4 Bounded Rationality of Decision-Making Under

Uncertainty

Herbert Simon outlined the idea of the theory of bounded rationality. This theory aims
to describe how individuals actually make decisions in situations of uncertainty in
which “the conditions for rationality are not met” [9, p. 377]. Even many psychologists
have come to believe that bounded rationality is the study of deviation from rationality
[10, p. 297]. Simon proposed satisficing (formed from the words satisfactory and
sufficing) as a general alternative to optimizing, also using the term to refer to a specific
decision-making heuristic—the satisficing heuristic. Satisficing can deal with uncer-
tainty—that is, with ill-defined situations in which not all alternatives and conse-
quences can be foreseen and well-defined. Bounded rationality is a descriptive theory,
which posits that rationality should respect the epistemological, environmental and
computational constraints of human brains. Additionally, rational behavior relies on a
satisficing process (finding a good enough solution) as opposed to the EUT maximizing
approach. The heuristic approach to decision‐making is the mechanism of imple-
menting bounded rationality. Example: simple fast‐and‐frugal tree using readily
available clinical cues outperformed a 50-variable multivariable logistic model
regarding the decision of whether to admit a patient with chest pain to a coronary care
unit [11]. G. Gigerenzer and his collaborators have theoretically and experimentally
shown that many cognitive fallacies are better understood as adaptive responses to a
world of uncertainty—such as the conjunction fallacy, the base rate fallacy, and
overconfidence [12].
We present a self-regulation model of decision-making under uncertainty which
implements limited (bounded) rationality. The main features of this model are core
shaping factors that determine instrumental and value rationality and the rules that
regulate coordination between them within the process of self-regulation.
Instrumental and Value Rationality of the Self-Regulation Model of Decision-Making 203

5 Instrumental and Value Rationality of Self-regulative

Decision-Making

The self-regulation model (SRM) of decision-making is developed within the frame-

work of the systemic-structural activity theory (SSAT) [13]. According to behavioral
and neuroscientific research, cognition and rational decision-making are not entirely the
product of rational information processing and symbol manipulation, but instead
require the involvement of emotion. The somatic marker hypothesis suggests a
mechanism by which emotional processes can self-regulate decision-making [14].

5.1 Shaping Factors of Instrumental and Value Rationality

In the self-regulation model, a goal determines value-based rationality by dividing
outcomes into positive and negative ones and energy-based rationality by distributing
energy between avoiding negative and achieving positive outcomes. Positive and
negative outcomes can be characterized by their significance (subjective importance)
and difficulty (subjective complexity). Significance has two components: value-based
(subjective importance) and energy-based (goal-inducing). Difficulty has two compo-
nents: value-based (subjective complexity) and energy-based (goal-inducing: attaining
positive outcomes and avoiding negative outcomes). We argue for the existence of
eight core shaping factors of instrumental and value rationality (Table 1).

Table 1. Core shaping factors of instrumental and value rationality

Significance Positive significance
Negative significance
Difficulty Positive component of difficulty
(positive difficulty)
Negative component of difficulty
(negative difficulty)
Information-based component of iS+
positive significance
Energy-based component of positive eS+
significance
Information-based component of iS-
negative significance
Energy-based component of eS-
negative significance
Information-based component of iD+
positive difficulty
Energy-based component of positive eD+
difficulty
Information-based component of iD-
negative difficulty
Energy-based component of eD-
negative difficulty
204 A. M. Yemelyanov and I. S. Bedny

Their language allows us to demonstrate the rationality of the self-regulative pro-

cess and show whether this rationality is information- and/or energy-based bounded—
for example, due to limitations in short-term memory and/or in the shortage of the list
of heuristics. These core shaping factors provide simplicity, reliability, and orthogo-
nality in the rational process of construction of both a mental model and the level of
motivation [7].

5.2 Self-regulation Model

SRM includes two sub-models: formation of the mental model (FMM), which is
executed by the divide-and-conquer algorithm, and formation of the level of motivation
(FLM), which is performed by the dynamic programming algorithm. Their interaction
is regulated by feedback and feedforward controls. Feedback control is regulated by the
factor of difficulty, while feedforward control is delineated by the factor of significance.
Energy-based component of significance provides instrumental rationality for:
(a) FMM by processing feedforward control to sub-goal and (b) FLM by processing
attractiveness of positive outcomes and unattractiveness of negative outcomes.
Information-based component of significance provides value rationality for:
(a) FMM by establishing subjective importance of sub-goals and (b) FLM by estab-
lishing subjective importance of positive and subjective unimportance of negative
outcomes.
Energy-based component of difficulty provides instrumental rationality for: (a) FMM
by processing external and internal feedback controls to divide the alternative into sub-
alternatives and (b) FLM by attaining positive outcomes and by avoiding negative
outcomes.
Information-based component of difficulty provides value rationality for: (a) FMM
by processing external and internal feedback controls to establish subjective com-
plexity of division the alternative into two sub-alternatives and (b) FLM by establishing
subjective possibility (likelihood) to attain positive outcomes and subjective possibility
(likelihood) to avoid negative outcomes.
M. Kotik illustrated that self-regulation increases the reliability of goal-directed
activity [15]. He described two types of self-regulation: self-regulation in the area of
information processes (information-based self-regulation) and self-regulation in the
area of energy (emotional) processes (energy-based self-regulation). The complexity in
decision-making is compensated by the intensification of information processes, as well
as by the energy reaction of the brain. All of this mobilizes an organism and brings it to
a state of preparedness for intensive exertion to overcome difficulties.

5.3 Self-regulation Rules of Instrumental Rationality

The rationality of the process of self-regulation consists of the effective construction of
such a mental model that can provide the satisficing solution with an appropriate level
of motivation to address the problem under consideration. Self-regulation processes
accumulate instrumental (or processing) rationality and value rationality. For ill-
structured problems, value cannot be produced without processing. Processing cannot
be done without value. Data processing can be specified in advance only for well-
Instrumental and Value Rationality of the Self-Regulation Model of Decision-Making 205

defined problems. In the self-regulation process, the leading role belongs to instru-
mental rationality. With the help of feedback and feedforward controls, the mechanism
of instrumental rationality guides the mechanism of value rationality in collecting
external and internal data for creating the level of motivation intended for choosing the
satisficing alternative. The important role of instrumental rationality not only consists
of processing external data from the environment, but also of eliciting internal data
from long-term memory [13]. The rules of self-regulation together with the rules of
motivation determine the process of self-regulation in decision-making under uncer-
tainty [16].
In the conclusion, we will briefly demonstrate how the self-regulation model
produces a rational (aka satisficing) solution for the “Asian disease” problem that was
analyzed earlier with the help of prospect theory, which produced an irrational deci-
sion. The description of the program with the help of the core factors of instrumental
and value rationality will look like this. First of all, the decision-making here is related
to two different problems with two different and uncertain goals and conditions:
Problem 1: Make a choice between problems A and B with the goal “save all 600
lives” (positive framing). Program 2: Make a choice between programs C and D with
the goal “do not allow any living patient out of 600 to die” (negative framing).
Problems 1 and 2 have the same information-based components of positive (iS +)
and negative (iS-) significance and positive (iD +) and negative (iD-) component of
difficulty. But there is a difference in the energy-based components of positive (eS +)
and negative (eS-) significance and positive (eD +) and negative (eD-) components of
difficulty. For Problem 1, this determines the higher level of motivation for choosing
program A (72%) as opposed to program B (28%) and for Problem 2, the higher level
of motivation for choosing program D (78%) as opposed to program C (22%).
Therefore, the self-regulation model of decision-making provides a rational base for
decisions that people have made for two “Asian disease” problems. Their instrumental
and value rationality were bounded due to the uncertain nature of these problems’ goals
and conditions. Operating only with value rationality, prospect theory turns out to be an
instrumentally poor choice for problems in the face of uncertainty.

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