Risk In Public Private Partnerships: Behavioral Experiments on Risk Preference, Risk Perception, and Risk Participation

This dissertation explores the effects of publicness, uncertainty, and sector-specific attitudes on micro-level risk behavior in public-private partnerships (PPPs). Following the emerging perspective of behavioral public administration, this thesis presents extensive quantitative evidence derived from four independent experimental studies that test causal hypotheses on the interaction of economic risk, behavioral uncertainty, partner heterogeneity, and conflicting incentive structures within the complex choice environment of PPPs, specifically focusing on decision makers’ risk preferences, risk perception, and risk participation. Based on Herbert Simon’s classic work on Administrative Behavior as well as insights and methods from social psychology and behavioral economics, this dissertation contributes to the theoretical foundations of micro-level risk behavior in PPPs.
Its central contributions are: (1) empirical evidence calling for a novel integrative concept of publicness as a powerful behavioral cue both priming and framing micro-level risk behavior in PPPs based on dissociated psychological clusters that trigger heuristic choice as relative cognitive benchmarks. (2) Experimental evidence that sector affiliation and sector-specific work-experience influence the interpretation of risk and sector-related information cues, revealing that public sector employment is strongly associated with risk-aversion and tolerance for delay. (3) Partners’ cross-sectoral heterogeneity in motives and logics creates behavioral ambiguity; sector affiliation functions as a complex signal that can lead to paradoxical premature PPP failure by unilaterally eroding partners’ trust in each other. (4) Public and private sector agents use dissimilar and asymmetric negotiation strategies when bargaining about financial gains and losses in PPPs; public agents negotiate less aggressively and settle on less profitable bargaining results. (5) Sector-specific attitudes and public service motivation asymmetrically moderate collaboration intent, the emergence and erosion of trust in partners, negotiation strategies in PPPs, the likelihood of (ir)rational defection, and pro-social rule-breaking.
Taken together, these findings substantially advance the scientific discourse on risk behavior in PPPs by challenging core assumptions about behavioral efficiency in these partnerships. By deciphering the integrative effects of sector-specific psychological, behavioral, and contextual biases within the complex incentive structures of PPPs, this dissertation presents novel insights into the micro-foundations of risk perception, risk behavior, and risk participation in PPPs. Calling for sector-conscious strategy making and risk-savvy PPP governance, it concludes with an agenda for future research as well as recommendations for theory and practice.