Prospect Theory Goes Public: Experimental Evidence on Cognitive Biases in Public Policy and Management Decisions

Abstract

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. Evidence for Practice• Being humans rather than robots, civil servants are prone to cognitive biases that may hinder public service provision. • As these cognitive biases are systematic rather than random, the architects of public organizations and services should account for them when designing the architecture of jobs and tasks. • Supposedly irrelevant factors that predictably affect decisions include the framing of outcomes, anchors, multiple alternatives, and decoy options. Research Article

Public Policy and Behavior Change

“…In this article, I aim to provide a short and accessible overview that informs practitioners and scholars about a topic of importance—in this case, how public policies can engender behavior change on the part of citizens. (For a focus on politicians or public managers, see, e.g., Bellé, Cantarelli, and Belardinelli ; George et al ; Nielsen ). I aim to answer two key questions.…”

Designing a Choice Architecture for Regulators

“…Public administrators and public managers have examined some of these biases, but findings are mixed as to whether biases lead public decisions to deviate from public interest outcomes (Bellé, Cantarelli, and Belardinelli ; Moynihan and Lavertu ; Roberts and Wernstedt ). The next section details how these biases apply to regulators and may lead regulatory decisions to deviate from public interest goals.…”

Trinity Is Still My Name: Renewed Appreciation for Triangulation and Methodological Diversity in Public Administration

“…Amid growing calls for mixed methods and triangulation, we must also herald the banner for rigor in quantitative analysis. Our lead article explores experimental evidence of cognitive bias in public management (Bellé, Cantarelli, and Belardinelli ). Belardinelli et al () use an experimental study of public managers to examine framing effects on the use of performance information.…”