Guest editorial: Behavioral public budgeting: rethinking fiscal behavior and institutional design

Fiscal governance is ultimately a human process. Whether citizens rank spending priorities, public managers interpret accounting data or elected officials enforce fiscal rules, decisions emerge from judgment under uncertainty (Kahneman and Tversky, 1974; De Bondt and Thaler, 1995; Gigerenzer and Goldstein, 1996). These judgments are shaped by attention, framing and emotion as much as by calculation. Over the past decade, a growing body of research in behavioral public administration and behavioral public finance has revealed that systematic cognitive patterns, rather than random error, underlie much decision-making in the public sector (Grimmelikhuijsen et al., 2017; Bhanot and Linos, 2020). Yet these behavioral insights remain fragmented across budgeting, accounting and performance management (see Anessi-Pessina et al., 2016; Mohr and Kearney, 2021; Overmans, 2024). This special issue brings them together under the integrative theme of Behavioral Public Budgeting.The purpose of this introduction is not to summarize individual contributions in this special issue but to articulate how behavioral research and behavioral thinking can reframe the study of fiscal governance. The articles in the special issue span diverse contexts and methods, ranging from experiments on citizens' framing effects in participatory budgeting and budget simulations to issues of information sequencing and learning, to analyses of how fiscal rules shape officials' reasoning and compliance behavior. Collectively, they show that behavior is not noise in fiscal systems but an integral part of how these systems function.At the citizen level, recent work demonstrates how framing and initial fiscal positions influence engagement and budget preferences (Afonso and Mohr, 2024; Mohr and Afonso, 2024). Within public sector budgeting, randomized survey-based field experiments show that non-financial performance and accrual-based cost information affect budget officers' assessments (Kuroki and Motokawa, 2022) and that behavioral “nudges” can influence decisions (Kuroki and Sasaki, 2023; Afonso and Mohr, 2024). Studies across governance contexts indicate that such mechanisms are likely not specific to cultures but depend on how organizations and institutions structure decisions (Tuxhorn et al., 2022). At the institutional level, emerging research on accounting and fiscal frameworks illustrates how formal rules and information systems both constrain and evoke behavioral responses (see McDonald et al., 2024).Together, these studies converge on a central puzzle: how cognition and institutional design interact in shaping fiscal behavior. The articles in this issue argue that heuristics such as loss aversion, anchoring and framing systematically and predictably influence individual decision-making and that understanding how institutional embedding and structuring of choice environments can also affect individual and collective decisions. We believe that understanding individual cognition and actual institutional environments can enhance both theory and practice. By linking individual judgment, collective deliberation and structural design, the special issue positions behavior not as a deviation from rational governance but as its organizing mechanism.Public budgeting and accounting were long discussed in a rationalist ideal. Classical theories, from early performance budgeting to contemporary fiscal rules, presumed that decision-makers objectively evaluated alternatives and selected those that maximized efficiency or value for money (Key, 1940; Lewis, 1952; Markowitz, 1952). In practice, fiscal decisions occur under bounded information, political pressure and competing values (Simon, 1944; Wildavsky, 1964). Under such conditions, reasoning is adaptive and heuristic rather than fully optimizing (Gigerenzer and Goldstein, 1996).This insight marks the behavioral turn in fiscal governance. Building on Simon's (1944, 1991) notion of bounded rationality, behavioral economics and psychology have shown that people use cognitive shortcuts to simplify complex problems (Kahneman and Tversky, 1974). These heuristics produce predictable deviations from normative rationality. In fiscal contexts, they explain recurring patterns: politicians anchor on previous allocations, citizens resist visible losses and managers overweight salient costs relative to abstract benefits (e.g. Kuroki and Sasaki, 2023; Overmans and Grimmelikhuijsen, 2025).Behavioral public administration has expanded the study of cognition and decision-making into government settings, showing that bounded rationality, social framing and accountability pressures influence how public servants perceive risk, responsibility and fairness (Battaglio et al., 2019). Yet core functions of public administration, i.e. budgeting, accounting and performance management, have remained peripheral to the behavioral agenda. The contributions in this special issue address that gap by treating behavior as an inherent part of fiscal systems rather than as a disturbance to be corrected.A growing body of research demonstrates that fiscal reasoning depends not only on what information is available but also on how it is presented and interpreted. Experimental studies show that cost information, performance data and accounting formats shape how managers and officials prioritize and justify spending (Kuroki, 2022; Kuroki and Motokawa, 2022). In participatory and digital budgeting contexts, the framing and starting points of simulations have been found to influence both the intensity of citizen engagement and the direction of their budget preferences (Afonso and Mohr, 2024; Mohr and Afonso, 2024). Likewise, research on information systems in public finance reveals that accounting categories and fiscal labels guide attention and influence decisions (Afonso and Mohr, 2024; Overmans and Grimmelikhuijsen, 2025). Across these settings, the design of the decision environment appears to matter as much as the effort individuals invest in deliberation.Recognizing and identifying these mechanisms requires reconsidering what counts as rationality in fiscal governance. Decision-making rarely follows a single economic logic. Rather, it reflects multiple and coexisting rationalities: economic, political and incremental (Thurmaier and Willoughby, 2001). Each defines “good budgeting” differently, emphasizing efficiency, legitimacy or procedural justice. What might appear irrational from an economic standpoint can be adaptive within an institutional context. Anchoring on previous allocations, for instance, can stabilize expectations and sustain incremental adjustment, while sensitivity to losses can safeguard legitimacy by avoiding visible harm to specific groups.This plural conception of rationality resonates with the notion of “ecological fit”: the alignment between reasoning and the environment in which it occurs (Todd and Gigerenzer, 2012). From this perspective, fiscal instruments such as budgets, accounting classifications and fiscal rules function as behavioral architectures: they channel attention, shape comparisons and cue justification. The behavioral turn in fiscal governance, as reflected in this special issue, moves beyond identifying cognitive biases. It seeks to understand how cognition and institutional design, interact with public financial management structures and how decision environments can be designed to enhance accountability, participation and fiscal performance.Understanding fiscal decision-making requires attention to the interaction between individual cognition, collective processes and institutional design. Building on the multi-level behavioral model proposed by Overmans (2024), this framework conceptualizes fiscal governance as an interconnected system of judgment, deliberation and design. It distinguishes three analytical levels (micro, meso and macro, see Figure 1) that together capture how behavioral mechanisms operate and interact across the architecture of public budgeting and accounting.At the micro level, individuals such as politicians, managers or citizens make judgments under uncertainty. Their reasoning relies on heuristics that simplify trade-offs, such as anchoring to existing allocations, framing options as losses or gains, or mentally categorizing funds by purpose (Overmans and Grimmelikhuijsen, 2025). Experimental studies consistently show that such shortcuts produce systematic, predictable effects on budget judgments legitimacy, or guide fairness considerations (for an overview across fields see Mohr and Kearney, 2023). The micro level captures how cognitive processes and information design interact in shaping fiscal preferences and perceptions of value for money.The meso level concerns the collective arenas in which fiscal choices are explored, negotiated, justified and communicated. Deliberation, sequencing and participation determine how individual judgments aggregate into collective outcomes. Studies of citizen engagement in budgeting demonstrate that framing effects can scale up through group processes: how issues are ordered or presented affects which trade-offs become salient and which are sidelined (Afonso and Mohr, 2024). Group deliberation can moderate or amplify individual biases, depending on whether settings foster open exchange or reinforce conformity (Mohr and Davis, 2023). Behavioral dynamics at the meso level, therefore, determine whether collective decisions amplify, offset or reinterpret individual heuristics.At the macro level, institutions provide the formal structure within which fiscal behavior unfolds. Fiscal rules, accounting systems and performance frameworks define not only incentives but also what is cognitively visible and normatively defensible. They influence how decision-makers perceive risks, justify actions and allocate attention (McDonald et al., 2024). Institutions act as behavioral architectures: they channel reasoning, frame comparisons and define what counts as “good behavior”. Macro-level designs can amplify biases for instance, when rigid fiscal rules foster short-termism) or mitigate them as in the case of accounting systems that enable reasoned deliberation and accountability.Across these three levels, feedback (Thaler and Sunstein, 2009; Tuxhorn et al., 2019) connects cognition, coordination and design. Micro-level biases shape meso-level learning, negotiation and justification, which over time may be institutionalized at the macro level. In turn, institutional routines and budget formats condition how individuals think and deliberate. This recursive relationship underscores the behavioral nature of fiscal governance: it is not only about how much is spent but also about how decisions are perceived, justified and collectively reproduced.The contributions in this special issue illustrate how behavioral mechanisms manifest across the micro, meso and macro levels of fiscal governance. While differing in focus and context, they share a concern with how cognition, interaction and institutional structures jointly shape fiscal reasoning and outcomes. Each contribution occupies a distinctive position in this behavioral architecture. Together, they form a coherent picture of fiscal decision-making as an embedded cognitive process rather than an abstract optimization exercise.At the micro level, Li et al. (2026) examine how cognitive biases shape the budget preferences of ordinary citizens participating in budget experiments in the Chinese context. This study replicates the experimental design by Overmans and Grimmelikhuijsen (2025), which was originally conducted among Dutch municipal budget officials, but applies it to a general public sample in China, which they relate to participatory budgeting. As in the original study, they test multiple cognitive mechanisms, including anchoring, herding, mental accounting and loss aversion. Their findings show that public budget decisions in the Chinese context are significantly influenced by anchoring effects, herding behavior and gain framing. By contrast, they find no statistically significant evidence for mental accounting or loss aversion. These results suggest that some behavioral effects may be robust across settings, while others remain context- or subject-dependent. The study therefore underlines the importance of replication across institutional and societal contexts.Also at the micro level, Flink et al. (2026) incorporate partisan heuristics into the analysis of framing effects. They examine how partisanship shapes citizen evaluations of K-12 school district performance and financial management. The study finds broad cross-partisan agreement that above-average student test scores improve overall district evaluations and that internal financial mismanagement negatively affects fiscal management evaluations, regardless of party. At the same time, important partisan differences emerge. Democrats more readily connect organizational performance to fiscal management evaluations and assign the lowest financial ratings to personnel cuts. Republicans respond more positively when a deficit is attributed to external state funding cuts, while Independents respond more negatively when internal mismanagement is identified as the cause. Notably, no cutback strategy significantly affected overall performance evaluations across partisan groups. The authors conclude that partisanship shapes citizen evaluations of financial management more strongly than their overall performance evaluations. This reinforces the broader point that public financial management is embedded in a wider political context.A different micro-level dynamic is explored by Multhomi (2026), who examines how sequencing shapes fiscal decision-making in online budget simulations. Building on a growing body of behavioral research on resident engagement in the budget process, particularly through tool such as Balancing Act, the paper investigates whether the order in which citizens complete a budget simulation and reveal their preferences affects the alignment between their stated goals and their actual resource allocations. Using a between-subjects experimental design, the study compares two sequences: the default of goal setting followed by budget allocation and an alternative sequence in which participants allocate resources before articulating their goals. Contrary to expectations, the alternative sequence produced stronger decision alignment. Participants who completed the budget-balancing exercise first allocated more resources to the priorities they subsequently identified. Multhomi (2026) interprets this finding in the light of anchoring effects and bounded rationality, suggesting that confronting fiscal trade-offs first sharpens participants' awareness of cost implications before they identify priorities. The study concludes that neither sequence is universally superior, but that sequencing should be matched to the practical aim of the exercise: the default sequence is more suitable when the objective is to identify public priorities early in the process, whereas the alternative is more suitable when the aim is to encourage fiscally grounded choices. The study shows clearly that sequence matters for budgetary outcomes.Finally, at the micro level, Overmans (2026) examines whether debiasing interventions influence budget judgments among politicians and civil servants. Using a survey experiment, the study compares three intervention types, generic, realistic and innovative, across two judgment phenomena that are central to public budgeting: anchoring and loss-framing. The findings show a differentiated pattern. Anchoring effects remain strong across all conditions, with none of the interventions reducing their influence. In the loss-framing experiment, effects are more limited overall, but the realistic intervention is associated with lower allocations relative to the bias-only condition. The study shows that debiasing in public budgeting does not produce uniform effects and that intervention effects may depend on how closely prompts connect to familiar decision contexts, consistent with an ecological view of judgment in budgeting.At the meso level, the study by Sarmento da Silva et al. (2026) addresses how budget practitioners learn to use cost information and cost models. Despite legal mandates and the potential value of such information, municipal public managers often have limited familiarity with cost information and its practical application. To address this gap, the authors designed and tested an experiential training course for municipal managers in Brazil. They compare three formats across 33 participants: a traditional lecture as control condition, problem-based learning (PBL) and storytelling. Using a design, the study finds that the course as a participants' understanding of cost information, the value of experiential statistically significant differences are found between the three course the group and the study a tested model for training public managers in the use of cost it accounting theory by experiential learning theory to a and by showing that learning environments can shape financial the macro level, and (2026) examine how and management in to a in This to of their or and potential of Using a design that compares with the the authors test three of and on theory and the behavioral model of the budgetary process. The findings all three before the no significant behavioral differences were between and the suggesting that the was the was but before the their in of in the of the the and to the in Notably, these behavioral appear to have been by concerns and the to fiscally rather than by of financial which were rarely in practice. 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