The policy consequences of cascade blindness

Adam Elga, Daniel M. Oppenheimer

Research output: Contribution to journalArticlepeer-review

Abstract

One way to reduce waste and to make a system more robust is to allow its components to pool resources. For example, banks might insure each other or share a common capital reserve. Systems whose resources have been pooled in this way are highly prevalent in such diverse domains as finance, infrastructure, health care, emergency response and engineering. However, these systems have a combination of characteristics that leave them vulnerable to poor decision-making: non-linearity of risk; obvious rewards combined with hidden costs; and political and market incentives that encourage inadequate safety margins. Three studies demonstrate a tendency for managers of such systems to underestimate the probability of cascading failures. We describe a series of behaviorally based policy interventions to mitigate the resulting hazards.

Original languageAmerican English
Pages (from-to)180-201
Number of pages22
JournalBehavioural Public Policy
Volume5
Issue number2
DOIs
StatePublished - Apr 15 2021

ASJC Scopus subject areas

  • Social Psychology
  • Sociology and Political Science
  • Social Sciences (miscellaneous)
  • Applied Psychology
  • Political Science and International Relations

Fingerprint

Dive into the research topics of 'The policy consequences of cascade blindness'. Together they form a unique fingerprint.

Cite this