Prospect theory and the potential for lottery-based subsidies

Noah Spencer

Behavioural Public Policy, 2023, vol. 7, issue 2, 500-517

Abstract: The relevant literature notes a lack of applications relative to the theoretical impact of prospect theory. In this paper, I provide a brief review of this literature aimed at policymakers before developing an idea for lottery-based government subsidy policies. I consider the general conditions under which such policies could be effective in (1) increasing the performance of desired behaviours and (2) saving governments money. I provide two examples of current Canadian subsidies that I argue could be improved with the addition of a lottery option.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:cup:bpubpo:v:7:y:2023:i:2:p:500-517_18

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