Applications of Behavioral Insights to Government Regulation
Posted: 10 Jun 2013
Date Written: May 23, 2013
One possible innovation in government that has received much attention recently is the application of behavioral insights to government programs. By incorporating more realistic assumptions regarding human psychology and behavior, behavioral economics holds the potential to improve economic analysis, make better predictions of field phenomena, and develop better public policy. For example, by considering how people process information, government programs can provide information, frame decisions, and set defaults in ways that are more likely to lead citizens to optimizing behavior. This discussion will explore how these insights are actually being applied, particularly in the regulatory arena, and whether the focus on deviations from strict rationality by individuals operating in a market environment has neglected to appreciate that individuals acting in their capacity as government decision-makers may also be subject to bounded rationality and cognitive biases.
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