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

Katherine Milkman, Mary Carol Mazza (), Lisa L. Shu (), Chia-Jung Tsay () and Max H. Bazerman ()
Additional contact information
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

No 09-147, Harvard Business School Working Papers from Harvard Business School

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.

Keywords: loss aversion; policy bundling; behavioral economics (search for similar items in EconPapers)
Pages: 19 pages
Date: 2009-06, Revised 2009-12
New Economics Papers: this item is included in nep-cbe, nep-pol and nep-upt
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Citations: View citations in EconPapers (3)

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