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Prospect theory and the potential for lottery-based subsidies

Published online by Cambridge University Press:  24 June 2020

NOAH SPENCER Open the ORCID record for NOAH SPENCER [Opens in a new window]
NOAH SPENCER*
Affiliation:
Competition Bureau of Canada, Gatineau, Quebec, Canada
*
*Correspondence to: Competition Bureau of Canada, 50 Rue Victoria, Gatineau, Quebec, Canada. E-mail: [email protected]
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Abstract

The relevant literature notes a lack of applications relative to the theoretical impact of prospect theory. In this paper, I provide a brief review of this literature aimed at policymakers before developing an idea for lottery-based government subsidy policies. I consider the general conditions under which such policies could be effective in (1) increasing the performance of desired behaviours and (2) saving governments money. I provide two examples of current Canadian subsidies that I argue could be improved with the addition of a lottery option.

Type
New Voices
Information
Behavioural Public Policy , Volume 7 , Issue 2 , April 2023 , pp. 500 - 517
Copyright
Copyright © The Author(s) 2020. Published by Cambridge University Press

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