THE ROLE OF BEHAVIORAL ECONOMICS PRINCIPLES AND THEORY IN CONCEPTUALIZING AND DEVELOPING PPP FRAMEWORK IN BIH
The paper is exploring the link between major principles of behavioural economics and development of PPP in Bosnia and Herzegovina. Rational reasons to enter PPP are recognized worldwide and range from financial to political motives. Relevance of these motives for Bosnia and Herzegovina has been discussed and overall, it is clear that all motives remain to be very valid. However, still no single PPP has been structured.
Research focus is on elaboration of analytical foundations for decision making process in considering PPPs on both sides of equation: in public and private sector, aiming to offer guidance on three basic questions in conceptualizing and developing PPPs in BiH: When? Why? and How?
Therefore, less rational field related to behavioural economics principles and theory has been explored. Firstly, the rationality of usual explanation for economic slowdown has been discussed and demystified aiming to prove that there are no insurmountable obstacles to make use of PPP concept in BiH, but rather prejudices and irrational fears. The perception of potential stakeholders is explored by structured interviews of public and private sector players, including largest corporations, SMEs, government, banks and development institutions. Questionnaire contained 10 quick questions aiming to get overall perception of PPP concept and obstacles for development of such projects in BiH.
The results show strong influence of behavioural economics principles on PPP perception by relevant stakeholders, confirming departure from three cornerstones of standard economic model: unbounded rationality, unbounded willpower and unbounded selfishness. Data analysis enables deeper insight into reasons for lack of willingness at both sides of equation: public and private sector to undertake further steps in developing PPPs. At the same time perception of PPPs by relevant stakeholders provide useful input to decision makers in identifying obstacles and creating supporting environment for PPPs.