Institut for Statskundskab

Prospect Theory and Public Service Outcomes: When do Citizen Prefer Risky Reforms to Reforms with Certain Outcomes?

Publikation: KonferencebidragPaperForskningpeer review

Prospect theory (Kahneman and Tversky 1979; Tversky and Kahneman 1992) has been widely acknowledged in the social sciences as a potential frame for understanding how people deal with uncertainty. Yet, little is known about whether key expectations from prospect theory also hold in a complex public service setting with outcomes in multiple dimensions. In this paper I draw on prospect theory to examine under what conditions citizens prefer uncertain – but potentially advantageous – reforms to reforms with more certain outcomes. Using a population based survey experiment with participation of 1,395 Danish citizens I find support for some of the expectations derived from prospect theory while the evidence is in outright opposition to the expectations in other instances. Most notably, I find that that citizens are more willing to take risks if reforms are associated with gains than if they are associated with losses; a finding which is at odds with the so-called reflection effect. The findings suggest that prospect theory should be applied with caution to complex settings with multi-dimensional outcomes.
Antal sider25
StatusUdgivet - 2016
BegivenhedTrans-Atlantic Dialogue 2016 - Gent, Belgien
Varighed: 8 jun. 201610 jun. 2016


KonferenceTrans-Atlantic Dialogue 2016

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