Exploring Cognitive Bias Effects on Budget Judgment Behavior: Scoping Review and Research Agenda

Abstract

Behavior is a critical aspect of public budgeting research. However, much of the scholarly focus has been on collective budgeting behavior, leaving a gap in understanding individuals’ pre-negotiation judgment behavior. This oversight is concerning given evidence from adjacent fields that highlights predictable information-processing irrationalities due to human cognitive limitations. While it is plausible that cognitive biases also influence individuals’ judgments of budget proposals, behavior-informed insights from Economics, Psychology, and Public Administration have yet to be fully integrated into public budgeting research. In this article, we differentiate between individual budget judgment and collective budget negotiation, advocating for renewed attention to budgeting behavior at the micro-level. Through a scoping review, we gather empirically verified effects of cognitive biases on private financial decision behavior and discuss these findings within the context of public sector decision-making. Our theoretical contribution includes the development of an advanced behavioral model of Public Budgeting and hypotheses to test cognitive bias effects on individual budgeting action. Amid recent criticisms of behavioral public administration, we are developing research agenda aimed not only at testing the existence of bias but also at identifying solutions to change judgment behavior, thereby better equipping individuals for collective budgeting action.