Arbeitspapier

Are World Leaders Loss Averse?

We focus on the preferences of an extremely salient group of highly-experienced individuals who are entrusted with making decisions that affect the lives of millions of their citizens, heads of government. We test for the presence of a fundamental behavioral bias, loss aversion, in the way heads of government choose decision rules for international organizations. If loss aversion disappears with experience and high-stakes it should not exhibited in this context. Loss averse leaders choose decision rules that oversupply negative (blocking) power at the expense of positive power (to initiate affirmative action), causing welfare losses through harmful policy persistence and reform deadlocks. We find evidence of significant loss aversion (λ = 4:4) in the Qualified Majority rule in the Treaty of Lisbon, when understood as a Nash bargaining outcome. World leaders may be more loss averse than the populous they represent.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 7763

Klassifikation
Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Bargaining Theory; Matching Theory
Thema
loss aversion
behavioral biases
constitutional design
voting
bargaining
voting power
EU Council of Ministers

Ereignis
Geistige Schöpfung
(wer)
Gould, Matthew
Rablen, Matthew D.
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2019

Handle
Letzte Aktualisierung
10.03.2025, 11:47 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Gould, Matthew
  • Rablen, Matthew D.
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2019

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