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Prospect Theory Goes Public: Experimental Evidence on Cognitive Biases in Public Policy and Management Decisions
Author(s) -
Bellé Nicola,
Cantarelli Paola,
Belardinelli Paolo
Publication year - 2018
Publication title -
public administration review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.721
H-Index - 139
eISSN - 1540-6210
pISSN - 0033-3352
DOI - 10.1111/puar.12960
Subject(s) - framing effect , framing (construction) , status quo , status quo bias , cognitive bias , anchoring , dominance (genetics) , rationality , public economics , prospect theory , public policy , cognition , context (archaeology) , economics , psychology , social psychology , positive economics , microeconomics , political science , biochemistry , market economy , gene , law , economic growth , chemistry , structural engineering , persuasion , engineering , biology , paleontology , neuroscience
This article tests a broad range of cognitive biases branching out from prospect theory in the context of public policy and management. Results illuminate systematic deviations from rationality. In experiments 1 through 5, the framing of outcomes influenced decisions across policy and management domains. In experiment 6, public employees were prone to an anchoring bias when setting standards for responsiveness. Experiment 7 shows that public workers tend to put more effort into activities that affect higher percentages of beneficiaries, even if the absolute number of affected clients is constant. Experiments 8 and 9 suggest that public employees are more likely to stick to a suboptimal status quo as the number of superior alternatives increases. Experiment 10 provides evidence of an asymmetric dominance effect: decisions changed when a decoy was present. This article contributes to behavioral public administration by replicating and extending previous trials .