Behavioral Law and Economics

Behavioral economics has been a growing force in many fields of applied economics, including public economics, labor economics, health economics, and law and economics. This paper describes and assesses the current state of behavioral law and economics. Law and economics had a critical (though underrecognized) early point of contact with behavioral economics through the foundational debate in both fields over the Coase theorem and the endowment effect. In law and economics today, both the endowment effect and other features of behavioral economics feature prominently and have been applied in many important legal domains. The paper concludes with reference to a new emphasis in behavioral law and economics on "debiasing through law" - using existing or proposed legal structures in an attempt to reduce people's departures from the traditional economic assumption of unbounded rationality.

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.)

Illusory Policy Implications of Behavioral Law & Economics

Behavioral law and economics has achieved notable policy influence promoting soft paternalism—using nudges to encourage better choices without limiting options. Recently, some behavioral scholars have suggested that positive behavioral models actually support hard paternalism—imposing mandates. This Article challenges the insinuation that behavioral law and economics supports mandates

Accuracy, gender and race in tort trials : a (behavioral) law and economics perspective

This thesis contributes to various streams of literature in the behavioral law and economics of tort law and judicial decisionmaking. Each chapter addresses a selected topic in this area from either a theoretical or an empirical perspective. The overarching theme of the thesis is the study of the interplay between accuracy and behavioral law and economics. The analysis reveals that, if carefully considered, behavioral law and economics can have an important role in policymaking as it sometimes allows to better predict: i) the effect of legal rules and courts’ practices on the behavior of regulatees; ii) how legal rules will be enforced by courts. The analysis shows also that the pursue of accuracy at trial does not necessarily lead to welfare improvements

SuperBias: The Collision of Behavioral Economics and Implicit Social Cognition

This Article explores what happens when behavioral law and economics and implicit social cognition collide, and presents an empirical study designed to test the hypothesis that racial stereotypes overpower behavioral economic phenomena...Section II details behavioral law and economics as well as implicit social cognition. It examines the social science basis of each field and explores the similar cognitive mechanics underlying them. Section III investigates what happens when race is introduced into economic decision-making and considers how racial stereotypes may specifically affect economic decisions already at risk of irrationality. Research has documented that economic decision-making is often discriminatory; new evidence suggests that these decisions may be predicted by implicit racial bias...Building on these rationale for considering behavioral economics and implicit social cognition together, section IV presents the empirical study I conducted to test the hypothesis that implicit racial stereotypes can overpower economic-based cognitive biases...Section V considers the results of the empirical study in light of behavioral law and economics literature as well as implicit bias scholarship. It proposes that all discussions of behavioral economics must become race competent and provides a research agenda for future empirical study. Section VI concludes

Can There Be a Behavioral Law and Economics?

The emergence of the modern law and economics analysis generally is dated to the early 1960s with the publication of seminal work by Ronald Coase\u27 and subsequently by Guido Calabresi and Douglas Melamed. These articles laid the foundation for the relation between legal rules, wealth maximization, and transaction costs, which provided the pivotal application of economic analysis to legal problems. However, the current sweep of law and economics would have been inconceivable without Gary Becker\u27s insight into the application of neoclassical comparisons of marginal utility to the stuff of everyday life. Becker\u27s analysis of routine decision making in terms of the likely returns from marginal choices allowed for the expansion of law and economic analyses into virtually every area of law. This approach is the keystone for Richard Posner\u27s introduction of the law and economics methodology: [E]conomics is the science of rational choice in a world-our world-in which resources are limited in relation to human wants. The task of economics, so defined, is to explore the implications of assuming that man is a rational maximizer of his ends in life, his satisfactions-what we shall call his self-interest. Rational maximization should not be confused with conscious calculation. Economics is not a theory about consciousness. Behavior is rational when it conforms to the model of rational choice, whatever the state of mind of the chooser. Clearly, the conception of rational utility calculations is key to this law and economics approach. But this conception is impossible without further simplifying assumptions. The most apparent assumptions are that, first, behavior could be presumed rational only when it conformed to the model of utility maximization, and second, that departures from this model would be random and would there- fore not affect the overall power of the economic analysis. The combined effect of these initial assumptions in turn allows law and economics to operationalize its insights. Since virtually all law and economics scholarship exists at the theoretical plane, turning on formal models rather than observed behavior, the presumption of behavior conforming (in the aggregate) to the economic predictions was an indispensable move. To the extent that this economic model tried to understand individual patterns of thought, it relied on a highly reductionist view of the human psyche

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

The Growing Pains of Behavioral Law and Economics

We are at the beginning of behavioral law and economics. We now see only dimly the outlines of the elaborate theory of decision making that is to come. We are like the independent scholars who examined the various parts of a very large animal and then tried to put together their reports to describe that animal; we each have bits and pieces of the elephant but no clear image of the entire beast. But we should not despair. We must remember that this behavioralist discipline is, as scholarly developments go, young. Indeed, the conventional law and economics model, to which behavioral law and economics is, in large part, a reaction, is itself relatively new. Law and economics has only recently established itself as a vigorous area of scholarship, as evidenced by regular courses within law schools, multiple textbooks, scholarly conferences, professional organizations, an AALS section, and so on. For instance, the American Law and Economics Association held its first annual meeting in May, 1991. Therefore, we should not be surprised if behavioral law and economics exhibits a degree of awkwardness, lack of focus, some fumbling, and other characteristics of youthfulness. In mitigation, I hasten to add that there are very strong reasons to believe that this particular youth will grow to a vigorous adulthood. Nor should anyone be discouraged by the perfectly sensible criticisms that others make of behavioral theories. They are right to be critical and skeptical, and we should be, too. We must undertake the difficult task of persuading them of the value of the behavioral model

Behavioral Law and economics

Monografia (graduação)—Universidade de Brasília, Faculdade de Economia, Administração e Contabilidade Departamento de Economia, 2015.O presente estudo visa destacar, à luz de behavioral law and economics, os entraves do modelo de agentes racionais adotado pela teoria econômica tradicional. São analisadas as limitações de racionalidade, força de vontade e autointeresse do agente, as quais o impedem de realizar escolhas ótimas que maximizem sua utilidade. Nesta análise, demonstra-se que a distinção entre o comportamento humano e o comportamento racional esperado decorre dos erros de julgamento capazes de influir na tomada de decisão. Tendo em vista que tais erros ocorrem de forma não aleatória, este trabalho aponta formas de atuação governamental passíveis de mitigar seus efeitos. Apresenta, então, as vantagens e as deficiências da aplicação de normas jurídicas como instrumento de combate aos erros de julgamento, o que se denomina debiasing through law. ______________________________________________________________________ ABSTRACTThe present study describes the limits of rational agents model adopted by traditional economic theory. It analyses bounded rationality, bounded willpower and bounded selfinterest wich deter the agent of making optmized choices that could maximize its utility. In this analysis it is shown that human behavior distinguishs from expected rational behavior due to judgment errors able to influence the decision-making. Considering that those errors occur non-randomly, this study points out forms of government actions wich are capable of mitigating its effects. Then, it displays the advantages and deficiencies of applying legal rules to combate judgment erros, that is called debiasing through law

Behavioral Economics Goes to Court: The Fundamental Flaws in the Behavioral Law & Economics Arguments Against No-Surcharge Laws

During the past decade, academics – predominantly scholars of behavioral law and economics – have increasingly turned to the claimed insights of behavioral economics in order to craft novel policy proposals in many fields, most significantly consumer credit regulation. Over the same period, these ideas have also gained traction with policymakers, resulting in a variety of legislative efforts, such as the creation of the Consumer Financial Protection Bureau. Most recently, the efforts of behavioral law and economics scholars have been directed toward challenging a number of state laws that regulate retailers’ use of surcharge fees for consumer credit card payments. In part as a result of these efforts, the issue has come before multiple courts with varying outcomes. In this article, we examine the merits of that effort. Claims about the realworld application of behavioral economic theories should not be uncritically accepted, and this is especially true when such claims are advanced to challenge a state’s commercial regulation on constitutional grounds. And courts should be particularly careful before relying on such claims where the available evidence fails to support them