Policy formulation is where potential solutions to a problem actually get developed, compared, and chosen. After a problem makes it onto the policy agenda (Unit 2.2), this is the stage where policymakers figure out what to do about it. Understanding how decisions get made here helps explain why some policies look carefully designed while others seem messy or incomplete.

Policy formulation process

Key components and stages

Policy formulation means developing courses of action that are both effective and politically acceptable. It sits between agenda setting and implementation in the policy cycle, and it unfolds in a rough sequence:

Generate policy alternatives for addressing the problem on the agenda. These could take many forms: legislative acts, executive orders, court decisions, regulatory changes, or other measures.
Narrow the set of alternatives by evaluating each one against key criteria (see below).
Select a preferred option and design the details of how it will be implemented.

Think of it as moving from a broad brainstorm to a final recommendation.

Assessing policy alternatives

Each alternative gets evaluated on several dimensions:

Feasibility: Can this actually be carried out with available resources and institutional capacity?
Political acceptability: Will enough stakeholders, legislators, or voters support it?
Costs and benefits: Do the expected gains justify the expected costs?
Unintended consequences: What side effects might this policy create, even if the main goal is achieved?

Once an alternative is chosen, policymakers pick policy instruments, which are the specific tools used to achieve the goal:

Authority: Laws, regulations, or mandates that require or prohibit behavior
Incentives: Tax breaks, subsidies, fines, or other financial motivators
Capacity-building: Funding for education, training, or infrastructure so people or institutions can comply
Symbolic acts: Speeches, proclamations, or gestures that signal priorities without directly changing behavior
Learning: Pilot programs, research initiatives, or evaluations designed to gather information before scaling up

Decision making models

No single model perfectly describes how policy decisions happen. Each model below captures a different piece of reality.

Rational and bounded rationality models

The rational-comprehensive model assumes policymakers identify all possible alternatives, evaluate every consequence, and select the option that maximizes net societal benefit. It's useful as a benchmark, but it describes an ideal, not how decisions actually work. In practice, no one has the time, information, or cognitive capacity to do all of that.

Bounded rationality, a concept developed by Herbert Simon, accounts for those real-world limits. Policymakers face time constraints, incomplete information, and cognitive biases. Instead of optimizing, they satisfice: they search through options until they find one that's "good enough" rather than perfect.

Key components and stages, Mission, Vision and Strategy - PROCSEE

Incremental and garbage can models

The incremental model (associated with Charles Lindblom) says most policy is just a small adjustment to what government is already doing. Policymakers focus on alternatives that differ only marginally from current policy, which reduces uncertainty and political conflict. This explains why dramatic policy shifts are rare and most change happens gradually.

The garbage can model (Cohen, March, and Olsen) takes a very different view. It portrays organizations as "organized anarchies" where problems, solutions, participants, and choice opportunities float around somewhat independently. A decision happens when these elements collide at the right moment. This model is especially useful for explaining decisions that seem irrational or poorly connected to the original problem.

Multiple streams model

John Kingdon's multiple streams model identifies three independent streams flowing through the policy system:

Problem stream: Issues gaining public and governmental attention
Policy stream: Proposals and solutions developed by experts and advocates
Political stream: The political climate, including public mood, election results, and interest group pressure

Major policy change happens when a policy window opens and a policy entrepreneur successfully couples all three streams. For example, a natural disaster (problem) might create an opening for a preparedness bill (policy) that aligns with the new administration's priorities (politics).

Evidence, expertise, and values in policy

Role of evidence

Evidence refers to the body of knowledge relevant to a policy issue: scientific research, program evaluations, statistical data, and stakeholder input. Policymakers use evidence to understand the scope of a problem, predict the effects of proposed solutions, and justify their decisions to the public.

How much evidence actually shapes a decision depends on several factors: the quality and availability of the evidence, whether policymakers are receptive to it, and the broader political climate. In highly polarized environments, even strong evidence can be sidelined.

Influence of expertise

Expertise is specialized knowledge held by individuals or organizations in a particular field. Policy experts help define problems, identify potential solutions, and provide technical advice on implementation.

Their influence depends on their perceived credibility, their ability to communicate complex findings in accessible terms, and how technically complex the issue is. On highly technical issues (like pharmaceutical regulation or climate modeling), expert input tends to carry more weight simply because fewer people can evaluate the evidence independently.

Key components and stages, Dr. Policy or: How I learned to stop worrying and love politics : Sunlight Foundation

Impact of values

Values are the principles, beliefs, and ideals that guide decision making at both individual and societal levels. They shape how problems get defined, what goals a policy pursues, and which criteria matter most when evaluating alternatives.

Policymakers' values are influenced by personal experiences, political ideology, and the preferences of their constituents. Conflicts often arise when evidence and expertise point in one direction but deeply held values pull in another. In those cases, policymakers may prioritize values over evidence, which is why two people can look at the same data and support very different policies.

Bargaining and compromise in policy decisions

Importance of bargaining and compromise

Because policymaking involves multiple stakeholders with different interests, bargaining and compromise are essential for getting anything done. Bargaining involves negotiation, concession-making, and trading of resources or support to reach a mutually acceptable outcome.

Effective bargaining requires each party to understand their own interests, the resources they bring to the table, and their BATNA (best alternative to a negotiated agreement). Your BATNA is what you'll end up with if negotiations fail, and it determines how much leverage you have.

Types of bargaining

Distributive bargaining is competitive. Each party tries to maximize its own share of a fixed set of resources, resulting in a zero-sum outcome (one side's gain is the other's loss). This is more common in one-time interactions or when resources are truly limited.
Integrative bargaining is collaborative. Parties work together to find solutions that expand the total value available, aiming for win-win outcomes. This requires open communication, trust, and a focus on shared interests rather than fixed positions.

Role of compromise

Compromise means each party accepts a less-than-ideal outcome to avoid an impasse. It's necessary when parties have genuinely conflicting interests but share a desire to move forward.

Several factors affect whether bargaining and compromise succeed:

The balance of power among the parties
The degree of trust and quality of communication
The availability of resources that can be traded or shared
The urgency of the issue (deadlines can force agreement)

Policy entrepreneurs play a key role here. They facilitate bargaining by reframing issues so different sides can find common ground, building coalitions across interest groups, and identifying creative solutions that create value for multiple parties.