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Journal of Evolutionary Economics

, Volume 29, Issue 5, pp 1399–1414 | Cite as

A note on the behavioral political economy of innovation policy

  • Jan Schnellenbach
  • Christian SchubertEmail author
Regular Article
  • 82 Downloads

Abstract

We propose that policy-making in the realm of innovation policy can be fruitfully analyzed from the perspective of Behavioral Political Economy. Citizens, policy-makers and also bureaucrats are prone to biases that have been empirically identified in behavioral economic and psychological research. When applied to innovation policy, it can be shown that under certain conditions, policy-makers are willing to support riskier innovative projects and that this tendency is amplified by public sector incentives, such as soft budget constraints. The same holds for a tendency to support ongoing innovative projects even if their profitability becomes increasingly doubtful. Finally, we also highlight how special-interest policies aimed at distorting risk perceptions can slow down the innovation process.

Keywords

Biases Heuristics Sunk cost fallacy Availability bias Overconfidence Loss aversion 

JEL classification

O38 D72 D78 H11 

Notes

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Brandenburg University of TechnologyCottbusGermany
  2. 2.German University in CairoCairoEgypt

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