Date of this Version
Organizational Behavior and Human Decision Processes
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).
© 2012. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
loss aversion, prospect theory, policy bundling, behavioral economics, joint-separate evaluation
Milkman, K. L., Mazza, M., Shu, L. L., Tsay, C., & Bazerman, M. H. (2012). Policy Bundling to Overcome Loss Aversion: A Method for Improving Legislative Outcomes. Organizational Behavior and Human Decision Processes, 117 (1), 158-167. http://dx.doi.org/10.1016/j.obhdp.2011.07.001
Business Law, Public Responsibility, and Ethics Commons, Economics Commons, Organizational Behavior and Theory Commons
Date Posted: 27 November 2017
This document has been peer reviewed.