The Behavioral Paradox: Why Investor Irrationality Calls for Lighter and Simpler Financial Regulation

It is widely believed that behavioral economics justifies more intrusive regulation of financial markets, because people are not fully rational and need to be protected from their quirks. This Article challenges that belief. Firstly, insofar as people can be helped to make better choices, that goal can usually be achieved through light-touch regulations. Secondly, faulty perceptions about markets seem to be best corrected through market-based solutions. Thirdly, increasing regulation does not seem to solve problems caused by lack of market discipline, pricing inefficiencies, and financial innovation; better results may be achieved with freer markets and simpler rules. Fourthly, regulatory rule makers are subject to imperfect rationality, which tends to reduce the quality of regulatory intervention. Finally, regulatory complexity exacerbates the harmful effects of bounded rationality, whereas simple and stable rules give rise to positive learning effects

ECONOMICS, PSYCHOLOGY AND HAPPINESS: VIRTUE THEORY VS. SLAVERY OF THE PASSIONS

The truth of any economic theory ultimately hinges on the truth of its philosophy of man. In this essay I will analyze modern economic thought from two perspectives: firstly, from its criticism and development by experimental psychology; secondly, from the philosophical anthropology and Aristotle and Thomas Aquinas. I will argue that although there is much truth in modern economics, its philosophical underpinnings are flawed in important aspects, and this accounts for its inability to explain and understand human behavior in some significant respects. I will try to pinpoint the essential character of the philosophical error, and argue for a better philosophy of the person that can provide a starting point for building a new economics.Economics and psychology, happiness, virtue theory

Credit Default Swaps and Insurance: Against the Potts Opinion

Little attention has been given to the possibility that CDS transactions might be construed as insurance contracts in English law. This article challenges the widespread “Potts opinion”, which states that CDSs are not insurance, because they do not require the protection buyer to sustain a loss or to have an insurable interest in the subject matter. CDSs often do provide protection against loss that the buyer is exposed to; loss indemnity is not a necessary characterisation of an insurance contract; insurable interest does not form part of the definition of insurance, but is an additional requirement of valid insurance; and what matters is the substance not the form of the contract. The situation in the US and Australia is also briefly considered.Peer reviewe

Social Norms, Culture and Better Regulation

Peer reviewe

The New Legal Paternalism: Light-Touch Regulation for Consumer Mortgages

Consumer mortgages have provoked extensive public debate, but traditional regulatory responses — more disclosure, product restrictions and usury laws — are widely seen as clumsy and ineffective. This article examines the possibility of improving consumer mortgage markets through light-touch regulations inspired by behavioral economics. Three regulatory strategies are investigated: targeted and simplified disclosure rules, cooling-off regulations, and the designing of a model mortgage. These strategies are examined using examples from recent or proposed EU and US legislation as well as ideas proposed by experts. With respect to novel disclosure and cooling-off rules, the proposed EU Mortgage Directive is found to include several positive ideas such as the European Standardised Information Sheet. Yet the most promising path seems to be the creation of a model mortgage for unsophisticated borrowers. In addition to proposing novel regulatory strategies, the article contributes to the wider debate on the acceptability of legal paternalism

Animal Spirits: How Human Psychology Drives the Economy and Why it Matters for Global Capitalism, by George A. Akerlof and Robert J. Shiller (book review)

Bokrecension: Animal spirits :how human psychology drives the economy, and why it matters for global capitalism / George A. Akerlof and Robert J. Shiller. (Princeton: Princeton University Press, 2009.)Kirja-arvio teoksesta Animal spirits :how human psychology drives the economy, and why it matters for global capitalism / George A. Akerlof and Robert J. Shiller. (Princeton: Princeton University Press, 2009.)Book review of Animal spirits : how human psychology drives the economy, and why it matters for global capitalism / George A. Akerlof and Robert J. Shiller. (Princeton: Princeton University Press, 2009.)Non peer reviewe

Law and Social Norms in Contractual Relationships

Law is important – but not as important as many lawyers believe. Evidence from different countries demonstrates that businessmen rely more on social norms than on legal rights and duties. Sometimes law is even deliberately avoided. Social norms and informal practices can also be enforced through a variety of non-legal sanctions. Law is still relevant, especially in non-continuous relationships and so-called end-game situations. But legal norms are most relevant and efficient when they are well-aligned with social norms.Peer reviewe

The Two Books of God

Augustine is considered one of the originators of the metaphor of the book of nature, but what did he say about it? This article examines all the metaphors with which Augustine seems to refer to the visible world as a divine book. It is found that four of the often-cited passages have a different meaning, but two of them refer to sensible nature as a book. The article further explores how the idea of God’s two books – nature and Scripture – influences Augustine’s literal interpretation of Genesis and his trinitarian theology. Finally, it argues that the ultimate foundation for the Augustinian book of nature should be sought in his theology of the Word

Liturgiset käännökset katolisessa kirkossa: Vatikaani II, Liturgiam authenticam ja Suomi

The article discusses liturgical translations in the Roman Catholic Church especially in the post-Vatican II period, i.e., from the 1960s onward.The article discusses liturgical translations in the Roman Catholic Church especially in the post-Vatican II period, i.e., from the 1960s onward