This study reports the findings of a comparative case study analysis of sixteen U.S. municipalities to
provide an in-depth examination of the choices municipal leaders are making to address revenue
shortfalls. The findings suggest that municipal fiscal choices during a recession fit the bounded
rationality model. While local government leaders will attempt to follow a rational sequence of fiscal
management decisions, as the economic situation worsens, the external pressures from electoral
considerations, state government restrictions, and interest group involvement increase, leading a
divergence in strategies. The greater the pressures (the bounds), the more unpredictable the
choices among municipalities become.
Cite as:
Nelson, Kimberly L. (2012). Municipal Choices During a Recession: Bounded Rationality and Innovation.
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Kimberly L. Nelson
Local Government Management