The biases of policymakers
Economics
Speaker: | Sheheryar Banuri, University of East Anglia |
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Date: | Wednesday 19 October 2016 |
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Time: | 13.30 |
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Location: | Streatham Court B |
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Further details
A large literature focuses on the biases in individual decision-making, and policies undertaken to mitigate these biases. However, there is little attention devoted in the literature on the biases of policymakers themselves. Using a novel subject pool of development professionals (employees of the World Bank and the Department for International Development in the UK), we conduct a series of survey vignettes using classic behavioural experiments adapted to the development context. The experiments focus on framing (gains vs. losses), risk aversion in a policymaking context, sunk costs and confirmation biases. We find that policymakers (similar to average individuals) are consistently biased in their decision-making. We find evidence for risk seeking in losses, and risk aversion in gains; greater risk-aversion when undertaking policy decisions; sensitivity to sunk costs; and prior beliefs influencing the evaluation of data (confirmation bias).