BIHEVIORISTIČKO PRAVO I EKONOMIJA (BEHAVIORAL LAW AND ECONOMICS)

The book Behavioral Law and Economics. co-authored by Eyal Zamir and Doron Teichman, was originally published in English by Oxford University Press in 2018.[1] In this book review, we will focus on  the Serbian translation of this monumental work in the field of behavioral law and economics.[2] This book is part of a corpus of books published within the ERASMUS+ project “Public Policy Making and Analysis (PPMA)”, which was funded by the European Commission and aimed at lifelong learning in the field of public policies in Serbia.[1] Eyal Zamir, Doron Teichman. (2018). Behavioral Law and Economics. Oxford University Press.[2] Ejal Zamir, Doron Tajhman. (2022). Biheviorističko pravo i ekonomija, [Behavioral Law and Economics], Dosije studio Beograd, Univerzitet u Novom Sadu, SeCons–grupa za razvojnu inicijativu, Beograd (662 str.)

Book Note: Law, Psychology, And Morality: The Role Of Loss Aversion, by Eyal Zamir

RATIONAL CHOICE THEORY, as a descriptive theory of human behaviour, claims that individuals seek to maximize their expected well-being.2 But cognitive psychologists have shown this to be false through experimental and empirical research.3 Instead, human behaviour is predictably subject to cognitive biases, resulting in judgments and decisions considered “irrational” by rational choice theorists. One such bias is loss aversion, whereby people prefer not losing some good over gaining a good of equal value.4 In Law, Psychology, and Morality: The Role of Loss Aversion, Eyal Zamir argues that loss aversion provides a partial explanation for many features of human behaviour within legal contexts and procedural and substantive legal principles

Foreword

The collection of articles in this Special Issue is based on an international conference on Advances in the Behavioral Analysis of Law: Markets, Institutions, and Contracts that took place on December 8, 2009 at the University of Haifa Faculty of Law in Israel. The conference addressed cuttingedge legal issues at the intersection of law, economics, and psychology from a diverse set of viewpoints, bringing together scholars engaged in both theoretical and experimental behavioral analyses of law

Exponential Growth Bias and the Law: Why Do We Save Too Little, Borrow Too Much, and Fail to React on Time to Deadly Pandemics and Climate Change?

Many human decisions, ranging from the taking of loans with compound interest to fighting deadly pandemics, involve phenomena that entail exponential growth. Yet a wide and robust body of empirical studies demonstrates that people systematically underestimate exponential growth. This phenomenon, dubbed the exponential growth bias (“EGB”), has been documented in numerous contexts and across different populations, using both experimental and observational methods. Despite its centrality to human decisionmaking, legal scholarship has thus far failed to account for the EGB. This Article presents the first comprehensive study of the EGB and the law. Incorporating the EGB into legal analysis sheds a new light on a long list of policy debates and highlights new solutions to many problems that the legal scholarship has been grappling with. More concretely, in the sphere of policymaking, the EGB explains the systematically delayed legal response to novel exponential risks such as the COVID-19 pandemic and climate change. Building on this insight, this Article highlights new legal strategies that could improve officials’ ability to react promptly and effectively to such threats. In the sphere of individual decisionmaking, this Article shows that the EGB causes people to systematically err when making decisions that involve exponential phenomena. Consequently, people often borrow too much, save too little, and fall prey to sophisticated marketing tactics. In light of these findings, this Article presents a novel regulatory framework, which includes new disclosure duties that could assist people to grasp the long-term implications of their choices, and the imposition of mandatory rules that would minimize the exploitation of the EGB by savvy profit-maximizing entrepreneurs

Promise, Agreement, Contract

It is natural to wonder about contract law’s relationship to the morality of promises and agreements. This Chapter distinguishes two ways to conceive of that relationship. First, parties’ agreement-based moral obligations might figure into the explanation of contract law—into an account of its functions or justifications. Contract law might serve to enforce parties’ first-order performance obligations, to enforce second-order remedial obligations, to support the culture of making and keeping agreements more generally, or at least to do no harm to that culture or to people’s ability to act morally. Second, contract can be understood as the legal analog to promise. Both contract and promise enable people to undertake new obligations to one another when they wish. Each is a type of normative power, the one legal, the other moral. The Chapter concludes by arguing that these two ways of thinking about contract law are not mutually exclusive. Contract law both imposes on parties to exchange agreements a legal obligation to perform for reasons independent of the parties’ possible contractual intent, and confers on them the power to undertake that legal obligation when they so intend because they so intend

Contract Theory and the Limits of Reason

It is widely agreed that no theory of contract is fully adequate—all theories face formidable descriptive, normative and conceptual difficulties. Why has contract scholarship failed to produce an acceptable theory of contract law, even after several decades of nuanced and sophisticated theoretical efforts? This Article answers this puzzle by offering a novel meta-theory of contract scholarship that focuses on the aesthetics of various contract theories. An aesthetic commitment, under this understanding, is a pre-theoretical presupposition regarding the form (as opposed to the substance) of legal discourse. The article argues that jurists harbor several different aesthetics and often employ them interchangeably and without noticing. The continuing struggle between different contract theories is isomorphous to the battle of aesthetics that rages in the legal community as a whole. Since there is no meta-aesthetic way to determine which aesthetic construction is correct, contract theories, which are based on different aesthetics, are destined to continue struggling indefinitely. The article explores four leading contract theories—promissory, reliance, economic and pluralistic conceptions of contract—and illustrates the manner each theory’s substantive insights are interwoven with aesthetics commitments, animating and giving the theories their unique character. In so doing, the article shows how the aesthetic point-of-view can better explain these theories’ specific strengths, weaknesses and disagreements, and it grounds its prediction that contract scholarship is not likely to produce a widely accepted theory any time soon

Three Pictures of Contract: Duty, Power and Compound Rule

A fundamental divide among theories of contract law is between those that picture contract as a power and those that picture it as a duty. On the power-conferring picture, contracting is a sort of legislative act, in which persons determine what law will apply to their transaction. On the duty-imposing picture, contract law puts duties on persons entering into agreements for consideration whether they want them or not. Until now, very little attention has been paid to the problem of how to tell whether a given rule is power conferring or duty imposing -- a question that should lie at the center of contract theory. This Article argues that two characteristic features of legal powers are an expectation that actors will satisfy the rule with the purpose of achieving the legal consequences and legal rules designed to facilitate such uses. A law might exhibit these features in either of two ways, which define two types of legal powers. Many power-creating laws employ conditions of legal validity, such as legal formalities, designed to ensure the actor\u27s legal purpose. The presence of such validity conditions is strong evidence that the law\u27s sole function is to create a legal power, and I suggest reserving the term power-conferring for such laws. Other laws anticipate and enable their purposive use without conditioning an act\u27s legal consequences on the actor\u27s legal purpose. The structure of such laws suggests that they function both to create powers and to impose duties. I coin the term compound for laws that satisfy this description, and argue that the contract law we have is a compound rule. The dual function of compound rules provides empirical support for pluralist justifications of contract law. An example of such a theory can be found in Joseph Raz’s comments on the relationship between contract law and voluntary obligations