Bounded Rationality and Public Policy: The Nudge and Boost Approaches.

Thursday, 19 July 2018
Júlia DE QUINTANA-MEDINA, Universitat Autònoma de Barcelona, Spain
Research on human behaviour and decision making points out the limitations of rational choice theory to explain how individuals behave. Many of this insight on human behaviour fall under the general category of ‘bounded rationality’ (BR). The term, accounts for an alternative approximation to human behaviour that emphasizes how in most real-life choices subjects do not behave in the way predicted by utility theory. Two different research programs build on the notion of BR: the heuristics and biases program and the fast-and-frugal heuristics program. Both focus on studying the cognitive processes that bring about behaviour in realistic situations. However, they present different normative and positive accounts of rationality. Following the current trend of applying behavioural insights to policy making, these two programs have proposed behavioural change strategies: the nudge and the boost approach, respectively. In the literature, their theoretical and applied views are said to be opposite interpretations of decision-making. However, it is not that clear. Although developed under apparently opposite interpretations of human behaviour the nudge and boost approach tend to share interest in similar phenomena, and prescribe similar interventions to change behaviour. This paper theoretically explores the research programs around BR and their prescriptive dimension. Rather than addressing which of the programs constitutes a better theoretical foundation for behavioural public policy, the goal of the paper is to explore the main points of agreement and identify insights that might be useful for policy making. Recently, insights of human behaviour and decision-making have become an important benchmark in policymaking. This has placed more interest in the theoretical debate on behaviour. The paper aims to clarify the debate on BR and public policy and address the role that behavioural theories should play in policy making.