Behavioral Political Economy: Cognitive Biases in Policymaking in Bosnia and Herzegovina

Abstract

This paper examines the potential of applying behavioral methods in the implementation of public policies in Bosnia and Herzegovina, starting from the theoretical framework of behavioral political economy. The paper traces the evolution from classical political economy and public choice approaches to modern theories that incorporate cognitive biases and heuristics. In particular, it examines effects such as loss aversion, status quo bias and framing are considered, as well as their influence on citizens and decision-makers. The paper also provides an overview of international experiences, ranging from the Behavioral Insights Team in the United Kingdom to OECD guidelines and initiatives in transitional and post-conflict societies, with the aim of identifying relevant models and transferable lessons. In addition, the paper analyzes the specificities of the institutional framework of Bosnia and Herzegovina, by showing how the divided competences between different levels of government and low trust in institutions amplify the application of cognitive biases and hinder reforms. As part of the discussion, the paper highlights potential benefits and obstacles for integrating behavioral methods into the implementation of domestic policies through experimental approaches, capacity building, and enhanced collaboration between academia and public administration.