Policy Bundling to Overcome Loss Aversion: A Method for Improving Legislative Outcomes

Loading...
Thumbnail Image
Penn collection
Management Papers
Degree type
Discipline
Subject
loss aversion
prospect theory
policy bundling
behavioral economics
joint-separate evaluation
Business Law, Public Responsibility, and Ethics
Economics
Organizational Behavior and Theory
Social and Behavioral Sciences
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Milkman, Katherine L
Mazza, Mary Carol
Shu, Lisa L
Tsay, Chia-Jung
Bazerman, Max H
Contributor
Abstract

Policies that would create net benefits for society that contain salient costs frequently lack enough support for enactment because losses loom larger than gains. To address this consequence of loss aversion, we propose a policy-bundling technique in which related bills involving both losses and gains are combined to offset separate bills’ costs while preserving their net benefits. We argue this method can transform unpopular individual pieces of legislation, which would lack the support for implementation, into more popular policies. Study 1 confirms that bundling increases support for bills with costs and benefits and that bundled legislation is valued more than the sum of its parts. Study 2 shows this finding stems from a diminished focus on losses and heightened focus on gains. Study 3 extends our findings to policies involving costs and benefits of the same type (e.g., lives) generated by different sources (e.g., food vs. fire safety).

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2012-01-01
Journal title
Organizational Behavior and Human Decision Processes
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation
Collection