Prospect Theory, Risk Preference, and the Law

To understand how people behave in an uncertain world - and to make viable recommendations about how the law should try to shape that behavior - legal scholars must employ a model or theory of decision making. Only with an understanding of how people are likely to respond to legal rules can legal scholars, judges, legislators, and regulators craft rules that are likely to encourage desirable behavior and discourage undesirable behavior. Rather than rely on rational choice theory, behavioral law and economics scholars (or legal decision theorists) have turned to Daniel Kahneman and Amos Tversky\u27s prospect theory to inform their analyses of law and legal behavior. Prospect theory contains several empirical propositions relevant to legal analysis, but this paper focuses primarily on prospect theory\u27s insight that people often make risk-averse choices when selecting between gains and risk-seeking choices when selecting between losses. The paper surveys efforts in the legal literature to use this insight to inform the way legal scholars think about law and behavior in several doctrinal areas. The paper acknowledges some limitations associated with this work (e.g., external validity, differences in individual decision making, differences in group vs. individual decision making), but it concludes that prospect theory is nonetheless a valuable tool for legal scholars and policy makers

Psychology and Effective Lawyering: Insights for Legal Educators

Psychology-the science of how people think, feel and behave-has a great deal to teach about a range of core competencies related to working with people and making good decisions. For example, psychologists have conducted extensive research into perception, memory, communication, individual and group decision-making, conflict, goal setting and planning, self-assessment, motivation, grit, and many other matters that are central to effective lawyering. This research has much to contribute to an understanding of the work of lawyers and can be effectively incorporated into how we teach law students to practice law

The Psychological Foundations of Behavioral Law and Economics

Over the past decade, psychological research has enjoyed a rapidly expanding influence on legal scholarship. This expansion has established a new field—“Behavioral Law and Economics” (BLE). BLE’s principal insight is that human behavior commonly deviates from the predictions of rational choice theory in the marketplace, the election booth, and the courtroom. Because these deviations are predictable, and often harmful, legal rules can be crafted to reduce their undesirable influence. Ironically, BLE seldom recognizes that its intellectual origins lie with psychology more so than economics. This failure leaves BLE open to criticisms that can be answered only by embracing the underlying psychological foundation of the field. Embracing psychology is harder than it seems, however, because psychology meshes much less easily with law than does economics. Consequently, BLE has yet to fully realize its potential and might never successfully do so

Social Value Orientation and the Law

Social value orientation is a psychological trait defined as an individual’s natural preference with respect to the allocation of resources. Law and economics scholarship takes as its starting point the rational actor, who is by definition interested solely in maximizing her own personal utility. But social psychology research demonstrates that, in study after study, approximately half of individuals demonstrate a “prosocial” orientation, meaning that they are interested in maximizing the total outcome of the group and are dedicated to an equal split of resources. Only around a quarter of individuals identify as “proself” individualists who prefer to maximize their own outcome per the rational actor model, and members of yet another, smaller group identify as “proself” competitors who want to maximize the relative difference between their own and others’ outcomes. This Article presents social psychologists’ findings regarding the nature of social value orientation and the role that it plays in guiding behavior. It then assesses legal theory and doctrine through the lens of social value orientation in several discrete substantive areas—contract law, corporate law, and family law—as well as in legal procedure and process, showing that “proself” and “prosocial” categories offer a meaningful and helpful way of understanding current doctrine and its effects on behavior. A consideration of social value orientation provides an important, empirical counterbalance to the rationality assumptions of law and economics, helping to show that personal utility maximization neither consistently guides the development of legal doctrine nor dictates human behavior in response to the law. In addition, taking social value orientation seriously suggests insights for the very nature of the relationship between law and human behavior, implicating “nudges,” the potential “crowding out” effect of laws that invoke extrinsic motivation, and the ultimate character of human utility

Behavioral War Powers

A decade of war has meant a decade of writing on war powers. From the authority to start a war, to restrictions on fighting wars, to the authority to end a war, constitutional lawyers and scholars have explored the classic issues (war initiation, prosecution, and termination) through the classic prisms (text, history, and function) for a new generation of national security challenges. Despite the volume of writing on war powers and the urgency of the debates in the context of Iraq, Afghanistan, Libya, and Syria, war powers debates are widely seen as stagnant. We introduce a new set of perspectives into the war powers literature. Over the last four decades, behavioral psychologists have identified persistent biases in individual and group decisionmaking. The behavioral revolution has had a significant impact on legal scholarship — primarily in law and economics — and has also influenced scholars in international relations, who increasingly write about psychological biases and other decisionmaking challenges. These insights, however, have yet to be applied in the war powers context. This Article brings the behavioral literature into the conversation on war powers, showing how lessons from behavioral psychology are relevant to decisions on war and peace. It outlines a variety of psychological biases that bear on decisions about war and peace, applies these lessons to a variety of war powers debates, and discusses broader institutional design strategies for debiasing decisionmaking. The lessons of psychology provide new functional perspectives on classic war powers debates: the authority of Congress versus the President to initiate wars, the scope of presidential authority to use force, the ability of Congress to restrict the conduct of war, the War Powers Resolution and the termination of wars, and the role of the United Nations. Some of the decisionmaking biases point in conflicting directions, so there are no simple answers or tidy solutions. But understanding where important decisions risk going wrong is the first step in figuring out how to make them go right

Taking Law and _______ Really Seriously: Before, During and after The Law

Any consideration of what legal education should consist of must begin with the question of what law, as a field of study, is. Whether a study of the law is science, philosophy, political science, or a field unto itself, or is more like a social science study of the norms and behaviors that human beings create and enforce for their self- governance, what the field is should have something to do with how it is studied. So, one can ask, what is the object of study when one studies the law ? Court decisions and interpretations (doctrine) and statutes and regulations (the rules) are the substantive law one could study. Or, one could study law\u27s processes ( adjectival law): procedure; constitutionalism (as in separation of powers, limited and specified authority, and federalism); institutional competence; law-making (legislation, administrative regulation, lobbying, advocacy); or enforcement and compliance (the law in action ). Then there are the hermeneutics, or interpretative study, of law\u27s meaning(s). To get at more root matters, one could study why there is law and what its purpose is (or should be)-the jurisprudence or theory of law. Even after defining the field of law one would still have to ask whether this field has a particular method of study that qualifies it to be called a discipline. Is law the study of the particular method of legal reasoning, which relies on precedents and rules of cases, differentiation of facts, policy analysis, and use of analogical reason to arrive at statements of what the law is? Does one treat law as the study of texts (as a humanistic discipline)? As the study of predictions or principles of social allocation (law and economics)? Or as predictions or descriptions of the actions of social institutions, legal actors, or the acted upon (socio-legal studies)? Or is law merely a practice or activity, without any particular disciplinary or field boundaries? Law would then be simply all that lawyers do. Or, in Holmesian terms, the law would be only what the law does to those who violate it-the sanctions imposed on bad men. Or, as this paper will suggest, perhaps there is no one way to see and study this elephant. Rather, the study of law is itself necessarily a multi-disciplinary enterprise, borrowing from or using the insights, methods, and canons of other fields to tell us about how we govern ourselves. As one sociologist of law has urged, when admonishing us to consider law and legal institutions from outside the categories that lawyers make: [Liaw is to be understood in terms of social theory. Legal theory is to be seen as a particular branch or application of social theory

Law and Economics After Behavioral Economics

This is the published version