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


  • 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)


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.

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  • 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

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    References listed on IDEAS

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    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.

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    loss aversion; policy bundling; behavioral economics;

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