A Note on the Behavioral Political Economy of Innovation Policy
Jan Schnellenbach () and
Christian Schubert ()
No 51, Working Papers from The German University in Cairo, Faculty of Management Technology
We propose that policy-making in the realm of innovation policy can be fruitfully analyzed from the perspective of Behavioral Political Economy. Citizens, policy-makers and also bureaucrats are prone to biases that have been empirically identified in behavioral economic and psychological research. When applied to innovation policy, it can be shown that under certain conditions, policy-makers are willing to support riskier innovative projects and that this tendency is amplified by public sector incentives, such as soft budget constraints. The same holds for a tendency to support ongoing innovative projects even if their profitability becomes increasingly doubtful. Finally, we also highlight how special-interest policies aimed at distorting risk perceptions can slow down the innovation process.
Keywords: Biases; Heuristics; Sunk Cost Fallacy; Availability Bias; Overconfidence; Loss Aversion (search for similar items in EconPapers)
JEL-codes: D72 D78 H11 O38 (search for similar items in EconPapers)
Pages: 20 pages
New Economics Papers: this item is included in nep-cbe, nep-ino, nep-pol and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://mgt.guc.edu.eg/wpapers/051Schubert_2019.pdf First version, 2019 (application/pdf)
Journal Article: A note on the behavioral political economy of innovation policy (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:guc:wpaper:51
Access Statistics for this paper
More papers in Working Papers from The German University in Cairo, Faculty of Management Technology Contact information at EDIRC.
Bibliographic data for series maintained by Lobna Sameer ( this e-mail address is bad, please contact ).