IDEAS home Printed from https://ideas.repec.org/p/hbs/wpaper/09-147.html
   My bibliography  Save this paper

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

Author

Listed:
  • Katherine L. Milkman

    () (The University of Pennsylvania)

  • Mary Carol Mazza

    () (Harvard Business School, Negotiation, Organizations and Markets Unit)

  • Lisa L. Shu

    () (Harvard Business School, Organizational Behavior Unit)

  • Chia-Jung Tsay

    () (Harvard Business School, Negotiation, Organizations and Markets Unit)

  • Max H. Bazerman

    () (Harvard Business School, Negotiation, Organizations and Markets Unit)

Abstract

Policies that would create net benefits for society but would also involve costs frequently lack the necessary support to be enacted because losses loom larger than gains psychologically. To reduce the harmful consequence of loss aversion, we propose a new type of policy bundling technique in which related bills that have both costs and benefits are combined. In our first laboratory study, we confirm across a set of four legislative domains that this bundling technique increases support for bills that have both costs and benefits. We also show in a second study that this effect stems from a diminished focus on losses and heightened focus on gains when policies are evaluated in bundled form.

Suggested Citation

  • Katherine L. Milkman & Mary Carol Mazza & Lisa L. Shu & Chia-Jung Tsay & Max H. Bazerman, 2009. "Policy Bundling to Overcome Loss Aversion: A Method for Improving Legislative Outcomes," Harvard Business School Working Papers 09-147, Harvard Business School, revised Dec 2009.
  • Handle: RePEc:hbs:wpaper:09-147
    as

    Download full text from publisher

    File URL: http://www.hbs.edu/research/pdf/09-147.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Frey, Bruno S. & Gallus, Jana, 2014. "Aggregate effects of behavioral anomalies: A new research area," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-15.
    2. Alberto Alesina & Francesco Passarelli, 2015. "Loss Aversion in Politics," NBER Working Papers 21077, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    loss aversion; policy bundling; behavioral economics;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hbs:wpaper:09-147. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Soebagio Notosoehardjo). General contact details of provider: http://edirc.repec.org/data/harbsus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.