Application of elements of behavioral science in public procurement

31/10/2022
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The International School of Logistics at the Kyrgyz State Technical University has launched a new teaching course "Application of elements of behavioral science in public procurement".

Developed with the support of the World Bank, this course will be integrated into the curricula of students studying the logistics of public procurement in the program of "Logistics". The procurement specialist must have the knowledge to ensure a reasonable balance of requirements - to carry out all procurement procedures in good faith and take into account the priorities of the state. In addition to the standard process of control and audit, the system of punishment, there are personal behavioral mechanisms that affect decision-making - fear of making a mistake, rejection of uncertainty, reassessment of negative consequences, readiness to act within the framework of known and standard behavior. These are the elements of behavioral science.

The purpose of the new teaching course is to study psychological phenomena, emotions, moods and group interests in the process of public procurement. The key point of behavioral science is the importance of taking into account the behavior of the individual. A person is considered as an intuitively and rationally acting person. The main features of behavior and factors that influence the behavior of the individual are revealed. The popular behavioral model "prospect theory" is chosen as a reference point for the presentation. Prospect theory is compared with the standard microeconomic expected utility model. Key elements of Prospect Theory are emphasized, detailing with examples the different perceptions of utility from losses and gains, and the replacement of event probabilities with "weights" that reflect overestimation of the probability of bad outcomes and underestimation of the probability of good outcomes. Part of the material is devoted to the effect of ownership (endowment) in order to understand its presence in the life of every person. An explanation is given of such concepts as framing and its presence in rational behavior during public procurement. The teaching of this course is based on interactive practical work on real examples of procurement entities in the Kyrgyz Republic.

Full text of the teaching course at the link: