Gould, M. and Rablen, M.D. orcid.org/0000-0002-3521-096X (2024) Are world leaders loss averse? Working Paper. Sheffield Economic Research Paper Series (2024011). Department of Economics, University of Sheffield ISSN 1749-8368
Abstract
We focus on the preferences of a 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, by examining heads of governments' choice of decision rules for international organizations. Loss averse leaders would choose decision rules that oversupply negative (blocking) power at the expense of positive power (to initiate affirmative action), causing potential welfare losses through harmful policy persistence and reform deadlocks. If loss aversion is muted by experience and high-stakes it may not be exhibited in this context. We find evidence of significant loss aversion implied in the Qualified Majority rule of the Treaty of Lisbon, when understood as a Nash bargaining outcome. World leaders may be more loss averse than the populous they represent.
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2024 The Author(s). For reuse permissions, please contact the Author(s). The Sheffield Economic Research Paper Series (SERPS) offers a forum for the research output of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by two internal referees and a departmental editor. However, the contents and opinions expressed remain the responsibility of the author(s). Comments are welcomed and should be addressed to the individual author(s). |
Keywords: | loss aversion; behavioral biases; constitutional design; voting; bargaining; voting power; EU Council of Ministers |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 27 Nov 2024 10:03 |
Last Modified: | 27 Nov 2024 10:03 |
Published Version: | https://www.sheffield.ac.uk/economics/research/ser... |
Status: | Published |
Publisher: | Department of Economics, University of Sheffield |
Series Name: | Sheffield Economic Research Paper Series |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:220134 |