Bogus, Carl T.

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Roger Williams University Law ReviewVolume 6 | Issue 1 Article 1Fall 2000Symposium: Rational Actors or Rational Fools?The Implications of Psychology for ProductsLiability: IntroductionCarl T. BogusRoger Williams University School of LawFollow this and additional works at: http://docs.rwu.edu/rwu_LRThis Symposia is brought to you for free and open access by the Journals at DOCS@RWU. It has been accepted for inclusion in Roger WilliamsUniversity Law Review by an authorized administrator of DOCS@RWU. For more information, please contact mwu@rwu.edu.Recommended CitationBogus, Carl T. (2000) "Symposium: Rational Actors or Rational Fools? The Implications of Psychology for Products Liability:Introduction," Roger Williams University Law Review: Vol. 6: Iss. 1, Article 1.Available at: http://docs.rwu.edu/rwu_LR/vol6/iss1/1Symposium: Rational Actors orRational Fools? The Implications ofPsychology for Products LiabilityIntroductionCarl T. Bogus*Why is a law review symposium filled with psychologists andmarketing experts (as well as distinguished products liability andtort scholars)? And what is the title of the symposium supposed tomean? In this introduction, I shall try to briefly answer thosequestions and try to explain what is at stake.The story that leads us to the present moment begins duringWorld War II with the Austrian school of economics and its mostprominent member, Friedrich von Hayek. This was a time whentotalitarian governments-in Germany, Italy, Spain, Russia andJapan-appeared frighteningly successful. Many wonderedwhether this was the inevitable face of the future. Would totalitar-ian systems ultimately prevail over democratic, free-market sys-tems, if not immediately on the battlefield then later throughscientifically planned economics?Hayek and the Austrian school of economics pursued an enter-prise of trying to show why centrally planned economies-what hecalled collectivist systems-were inferior to free market economies.Hayek conceded that in an ideal world there would be great advan-tages to a planned economy, but he argued that, as a practical mat-ter, it was impossible for central planners to do all the supply anddemand calculations necessary to direct a large, modern economy.1Should the state produce more shoes or more tires, more socks or* Associate Professor, Roger Williams University School of Law. A.B., J.D.,Syracuse University. Professor Bogus was the organizer of this symposium.1. See F. A. Hayek, The Road To Serfdom 55 (1994).2 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 6:1more coats, more nails or more lunch boxes, more canned peachesor more canned tomatoes, and so on? There are simply too muchdata to analyze and too many calculations to make.What made Hayek so successful was his ability to tie this prac-tical, seemingly objective argument to normative arguments aboutfreedom and liberty. "[1It would be impossible for any mind to com-prehend the infinite variety of different needs of different peoplewhich compete for the available resources and to attach a definiteweight to each,"2 he wrote. "This," he argued, "is the fundamentalfact on which the whole philosophy of individualism is based."3Hayek continued:[Tihe limits of our powers of imagination make it impossibleto include in our scale of values more than a sector of theneeds of the whole society, and that, since, strictly speaking,scales of value can exist only in individual minds, nothing butpartial scales of values exist-scales which are inevitably dif-ferent and often inconsistent with each other. From this theindividualist concludes that the individuals should be al-lowed, within defined limits, to follow their own values andpreferences rather than somebody else's; that within thesespheres the individual's system of ends should be supremeand not subject to any dictation by others.4In the United States, Hayek caught the attention of Aaron Di-rector, an economist associated with the University of Chicago.5 In1944, at Director's urging, the University of Chicago Press pub-lished Hayek's now-classic work, The Road to Serfdom, which hadpreviously been rejected by three other publishers. 6 A couple ofyears later, Hayek helped the University of Chicago obtain sub-stantial funding for a center dedicated to promoting private enter-prise. 7 It is historically significant that the donor stipulated thatthe center be affiliated-not with the economics department, as onemight have expected-but with the law school.8 Hayek joined the2. Id. at 65-66.3. Id. at 66.4. Id.5. See generally Neil Duxbury, Patterns of American Jurisprudence 339-48(1995) (discussing Aaron Director's involvement with Hayek's career).6. See id. at 342.7. See id.8. See id.INTRODUCTIONChicago faculty, Director headed the center, 9 and the field that wetoday think of as law-and-economics was born.Hayek never argued that people were rational actors. On thecontrary, he conceded that the masses could be manipulated bypropaganda, advertising and other forces.' 0 "But this does notmean," he wrote, "that anyone is competent, or ought to havepower, to select those to whom this freedom is to be reserved. Itcertainly does not justify the presumption of any group of people toclaim the right to determine what people ought to think or be-lieve."" Hayek did not argue that individuals were competent tomake choices for themselves; rather, he based his argument on theinability, and the immorality, of central planners making choicesfor them.Ironically, Hayek's argument was consistent with the conceptof bounded rationality, that is, that decision-making is constrainedbecause people can only possess and process limited amounts ofinformation. Herbert Simon illustrated the idea of bounded ration-ality by comparing economic actors to chess players. 12 In choosingwhat move to make, a chess player must consider what responsehis opponent will make, what options he will then have, what pos-sible moves his opponent can make to each of those options, and soon, until the end of the game. If chess players could consider all ofthese possibilities they would play perfectly. But the possible sce-narios approach the infinite, and neither the human mind nor anycomputer yet devised can analyze this vast amount of information.However, it is now the central premise of the Chicago neo-classical economics (on which law-and-economics is based) thatboth business firms and individuals are rational actors. That is,not only do businesses act rationally to maximize profits, but con-sumers act rationally to maximize their own interests. MiltonFriedman, who became the most influential member of the Chicagoschool, argues that the free market works so well because peopleare rational, or at least, people act as if they are rational. 13 Incontrast to Simon's chess player, Friedman offers a billiard player9. See id.10. See Hayek, supra note 1, at 180.11. Id.12. See Duxbury, supra note 5, at 370.13. See id. at 371.200014 ROGER WILLIAMS UNIVERSITY LAW REVIEWanalogy.14 Friedman argues that while an expert billiard playermay not consciously know all the laws of physics, geometry, andmathematics that explain how the force she applies to the cue ballcauses the other balls to react and travel in desired directions, shenevertheless plays as if she does. 15 In much the same way, arguesFriedman, business firms seeking to maximize profits behave as ifthey possess and have processed all the information necessary forthem to succeed. 16Rational choice theory, as it is called, has extended its influ-ence well beyond the confines of economics. It has become an im-portant school of thought-aspiring to become the dominant schoolof thought-in both political science 17 and in law,' 8 where it isknown as law-and-economics. Richard A. Posner, the best knownproponent of law-and-economics, argues that individuals act intheir own self-interest so regularly and so predictably that whenan individual claims he is wrestling with a difficult decision andhas not yet decided what course to pursue, others who know thisindividual well and understand his needs and desires can betterpredict what he will do than can the individual himself.1 9Although all of law-and-economics rests on the single pillar ofrational choice theory, the argument that people are rational ac-tors is often presented as nothing more than an assumption. Theprime example is Richard A. Posner's Economic Analysis of Law,20which is undoubtedly the single most important text in the field oflaw-and-economics. Posner devotes no more than a few sentences14. See id.15. See id.16. See id.17. See, e.g., Jonathan Cohn, Irrational Exuberance, New Republic, Oct. 25,1999, at 25 (describing the ascendancy of rational choice theory within prominentpolitical science departments and journals); James Ryerson, Games People Play:Rational Choice with a Human Face, Lingua Franca, DecJJan. 2000, at 61(describing rational choice theory generally and its influence within both politicalscience and law).18. See, e.g., Anthony Kronman, The Lost Lawyer 166 (1993) (stating thatlaw-and-economics is "the single most important change in American legal educa-tion in the last twenty-five years"); Mark Tushnet, Idols of the Right, Dissent, Fall1993 ("For a moment it seemed possible that Ulaw-and-economicsl would becomethe leading dialect, dominating the conversation of law; now it seems likely to beonly a specialized discourse, to be used or abandoned as seems helpful.")19. See Richard A. Posner, The Problems of Jurisprudence 187 (1990).20. See Richard A. Posner, Economic Analysis of Law (4th ed. 1992).[Vol. 6:1INTRODUCTIONof his 722-page work to this fundamental proposition. On the firstpage of the first chapter, Posner writes:As conceived in this book, economics is the science of rationalchoice in a world-our world-in which resources are limited inrelation to human wants. The task of economics, so defined,is to explore the implications of assuming that man is a ra-tional maximizer of his ends in life, his satisfactions-what weshall call his "self-interest."2 1How, one wonders, can so grand an edifice rest on a mereassumption?The title of our symposium comes from an article by AmartyaK. Sen, entitled Rational Fools: A Critique of the Behavioral Foun-dations of Economic Theory.22 In this article, Sen argues that ra-tional actor theory is flawed because people are more complex thanthe theory allows. Rational actor theory requires reducing a per-son's needs, desires, motives, impulses and moral judgments tosome kind of standard measure. Rational actor theorists see peo-ple as self-seeking egoists because "[it is possible to define a per-son's interests in such a way that no matter what he does he can beseen to be furthering his own interests in every isolated act ofchoice."23 That is, when an individual chooses x rather than y, ra-tional actor theorists conclude the individual preferred x to y, andthen assign a greater numerical value to the utility of x than theutility of y. Sen notes such a theory will appear to validate itselfevery time, except when the individual makes inconsistentchoices. 2421. Id. at 3 (footnote omitted) (emphasis added). Elsewhere, Posner hasstated this assumption in even stronger terms:The basic assumption of economics that guides the version of eco-nomic analysis of law that I shall be presenting is that people are rationalmaximizers of their satisfactions-all people (with the exception of smallchildren and the profoundly retarded) in all of their activities (exceptwhen under the influence of psychosis or similarly deranged through drugor alcohol abuse) that involve choice.Posner, supra note 19, at 353.22. Amartya K Sen, Rational Fools: A Critique of the Behavioral Foundationsof Economic Theory, 6 Phil. & Pub. Aff. 317 (1977).23. Id. at 322 (footnote omitted).24. See id. at 322-23. And, although Sen does not mention it, the rationalactor theorist can conclude that values have changed over time, i.e., the individualderived more utils of pleasure from vanilla yesterday but more utils of pleasurefrom chocolate today. We would simply say the individual wanted vanilla yester-200016 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 6:1Rational choice theory, Sen argues, is too simple, too reduc-tionist, because it assumes that all of a person's interests, welfare,ideas, and desires can be given one preference ordering.25 It canall be measured with the same yardstick. He continues:Can one preference ordering do all these things? A personthus described may be "rational" in the limited sense of re-vealing no inconsistencies in his choice behavior, but if he hasno use for these distinctions between quite different concepts,he must be a bit of a fool. The purely economic man is indeedclose to being a social moron. 26Despite the criticisms, rational choice theorists continue to ar-gue that people act rationally in all sorts of things-love, marriage,adoptions, pornography, taking drugs, playing the lottery-indeed,perhaps all pursuits.27 Some ridicule these views.28 Both sides inthe debate are now increasingly turning to cognitive psychology.Psychologists talk about bounded rationality, that is, limits to ra-tional thought and behavior. They talk about cognitive biases,which can be thought of as quirks or disruptions in rationality. 29They claim, as I understand them, that some cognitive biases arepredictable. The idea that people act irrationally in predictableways presents conflicting challenges and opportunities to bothsides in the debate. Proponents of rational choice theory see it as ameans of closing loopholes in their grand theory. They believe thatif we can understand when people will depart from their usual be-havior of acting rationally, and know how they will act even whenday and chocolate today, but the legal economist believes he has achieved a deeperunderstanding of behavior.25. See id.26. Id. at 335-36.27. See Gary S. Becker, The Economic Approach to Human Behavior (1976)(applying rational choice theory to a wide spectrum of activities including love,altruism and drug taking); Edward J. McCaffery, Why People Play Lotteries andWhy it Matters, 1994 Wis. L. Rev. 71 (applying rational choice theory to the lot-tery); Elisabeth M. Landes & Richard A. Posner, The Economics of the BabyShortage, 7 J. Legal Stud. 323 (1978) (applying rational choice theory toadoptions).28. See, e.g., Alan S. Blinder, The Economics of Brushing Teeth, 82 J. Pol.Econ. 887 (1974).29. A superb overview of the psychological literature can be found in Jon D.Hanson & Douglas A. Kysar, Taking Behavioralism Seriously: The Problem ofMarket Manipulation, 74 N.Y.U. L. Rev. 630 (1999); Jon D. Hanson & Douglas A.Kysar, Taking Behavioralism Seriously: Some Evidence of Market Manipulation,112 Harv. L. Rev. 1420 (1999).INTRODUCTIONthey are acting irrationally, we can refine the predictive power ofrational choice theory. Critics, on the other hand, argue that ifpeople act irrationally in predicable ways, they can be manipulatedby propaganda and advertising.Some of this is about technique. In the products liability field,we want to know whether we can help consumers make rationalpurchasing decisions and use potentially dangerous productssafely by furnishing them with information. To know that, wemust understand how much information consumers can absorband how they process information. But much more than techniqueis at stake. At bottom, this is a deep political argument. The de-bate today is, of course, no longer between collectivism or capital-ism; it is about how much regulation is desirable in a free marketeconomy. Those who believe that people are rational actors tend tobelieve that less regulation is necessary. Consumers can best takecare of themselves. Those who believe that people may often beirrational-and susceptible to manipulation by propagandists andadvertisers-favor more regulation.We decided that it would be useful not only to have legal schol-ars argue about the implications of cognitive psychology for prod-ucts liability, but to hear directly from the psychologiststhemselves. We are fortunate to have some of the nation's mostprominent cognitive psychologists and marketing experts partici-pate. They have much to teach us.20001

Symposium: Rational Actors or Rational Fools? The Implications of Psychology for Products Liability: Introduction

Roger Williams UniversityDOCS@RWUFaculty Scholarship Faculty Scholarship10-1-2000Rational Actors or Rational Fools - TheImplications of Psychology for Products Liability:IntroductionCarl T. BogusRoger Williams University School of LawFollow this and additional works at: http://docs.rwu.edu/law_fac_fsPart of the Products Liability CommonsThis Article is brought to you for free and open access by the Faculty Scholarship at DOCS@RWU. It has been accepted for inclusion in FacultyScholarship by an authorized administrator of DOCS@RWU. For more information, please contact mwu@rwu.edu.Recommended CitationBogus, Carl T., "Rational Actors or Rational Fools - The Implications of Psychology for Products Liability: Introduction" (2000).Faculty Scholarship. Paper 35.http://docs.rwu.edu/law_fac_fs/35Symposium: Rational Actors orRational Fools? The Implications ofPsychology for Products LiabilityIntroductionCarl T. Bogus*Why is a law review symposium filled with psychologists andmarketing experts (as well as distinguished products liability andtort scholars)? And what is the title of the symposium supposed tomean? In this introduction, I shall try to briefly answer thosequestions and try to explain what is at stake.The story that leads us to the present moment begins duringWorld War II with the Austrian school of economics and its mostprominent member, Friedrich von Hayek. This was a time whentotalitarian governments-in Germany, Italy, Spain, Russia andJapan-appeared frighteningly successful. Many wonderedwhether this was the inevitable face of the future. Would totalitar-ian systems ultimately prevail over democratic, free-market sys-tems, if not immediately on the battlefield then later throughscientifically planned economics?Hayek and the Austrian school of economics pursued an enter-prise of trying to show why centrally planned economies-what hecalled collectivist systems-were inferior to free market economies.Hayek conceded that in an ideal world there would be great advan-tages to a planned economy, but he argued that, as a practical mat-ter, it was impossible for central planners to do all the supply anddemand calculations necessary to direct a large, modern economy.1Should the state produce more shoes or more tires, more socks or* Associate Professor, Roger Williams University School of Law. A.B., J.D.,Syracuse University. Professor Bogus was the organizer of this symposium.1. See F. A. Hayek, The Road To Serfdom 55 (1994).2 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 6:1more coats, more nails or more lunch boxes, more canned peachesor more canned tomatoes, and so on? There are simply too muchdata to analyze and too many calculations to make.What made Hayek so successful was his ability to tie this prac-tical, seemingly objective argument to normative arguments aboutfreedom and liberty. "[1It would be impossible for any mind to com-prehend the infinite variety of different needs of different peoplewhich compete for the available resources and to attach a definiteweight to each,"2 he wrote. "This," he argued, "is the fundamentalfact on which the whole philosophy of individualism is based."3Hayek continued:[Tihe limits of our powers of imagination make it impossibleto include in our scale of values more than a sector of theneeds of the whole society, and that, since, strictly speaking,scales of value can exist only in individual minds, nothing butpartial scales of values exist-scales which are inevitably dif-ferent and often inconsistent with each other. From this theindividualist concludes that the individuals should be al-lowed, within defined limits, to follow their own values andpreferences rather than somebody else's; that within thesespheres the individual's system of ends should be supremeand not subject to any dictation by others.4In the United States, Hayek caught the attention of Aaron Di-rector, an economist associated with the University of Chicago.5 In1944, at Director's urging, the University of Chicago Press pub-lished Hayek's now-classic work, The Road to Serfdom, which hadpreviously been rejected by three other publishers. 6 A couple ofyears later, Hayek helped the University of Chicago obtain sub-stantial funding for a center dedicated to promoting private enter-prise. 7 It is historically significant that the donor stipulated thatthe center be affiliated-not with the economics department, as onemight have expected-but with the law school.8 Hayek joined the2. Id. at 65-66.3. Id. at 66.4. Id.5. See generally Neil Duxbury, Patterns of American Jurisprudence 339-48(1995) (discussing Aaron Director's involvement with Hayek's career).6. See id. at 342.7. See id.8. See id.INTRODUCTIONChicago faculty, Director headed the center, 9 and the field that wetoday think of as law-and-economics was born.Hayek never argued that people were rational actors. On thecontrary, he conceded that the masses could be manipulated bypropaganda, advertising and other forces.' 0 "But this does notmean," he wrote, "that anyone is competent, or ought to havepower, to select those to whom this freedom is to be reserved. Itcertainly does not justify the presumption of any group of people toclaim the right to determine what people ought to think or be-lieve."" Hayek did not argue that individuals were competent tomake choices for themselves; rather, he based his argument on theinability, and the immorality, of central planners making choicesfor them.Ironically, Hayek's argument was consistent with the conceptof bounded rationality, that is, that decision-making is constrainedbecause people can only possess and process limited amounts ofinformation. Herbert Simon illustrated the idea of bounded ration-ality by comparing economic actors to chess players. 12 In choosingwhat move to make, a chess player must consider what responsehis opponent will make, what options he will then have, what pos-sible moves his opponent can make to each of those options, and soon, until the end of the game. If chess players could consider all ofthese possibilities they would play perfectly. But the possible sce-narios approach the infinite, and neither the human mind nor anycomputer yet devised can analyze this vast amount of information.However, it is now the central premise of the Chicago neo-classical economics (on which law-and-economics is based) thatboth business firms and individuals are rational actors. That is,not only do businesses act rationally to maximize profits, but con-sumers act rationally to maximize their own interests. MiltonFriedman, who became the most influential member of the Chicagoschool, argues that the free market works so well because peopleare rational, or at least, people act as if they are rational. 13 Incontrast to Simon's chess player, Friedman offers a billiard player9. See id.10. See Hayek, supra note 1, at 180.11. Id.12. See Duxbury, supra note 5, at 370.13. See id. at 371.200014 ROGER WILLIAMS UNIVERSITY LAW REVIEWanalogy.14 Friedman argues that while an expert billiard playermay not consciously know all the laws of physics, geometry, andmathematics that explain how the force she applies to the cue ballcauses the other balls to react and travel in desired directions, shenevertheless plays as if she does. 15 In much the same way, arguesFriedman, business firms seeking to maximize profits behave as ifthey possess and have processed all the information necessary forthem to succeed. 16Rational choice theory, as it is called, has extended its influ-ence well beyond the confines of economics. It has become an im-portant school of thought-aspiring to become the dominant schoolof thought-in both political science 17 and in law,' 8 where it isknown as law-and-economics. Richard A. Posner, the best knownproponent of law-and-economics, argues that individuals act intheir own self-interest so regularly and so predictably that whenan individual claims he is wrestling with a difficult decision andhas not yet decided what course to pursue, others who know thisindividual well and understand his needs and desires can betterpredict what he will do than can the individual himself.1 9Although all of law-and-economics rests on the single pillar ofrational choice theory, the argument that people are rational ac-tors is often presented as nothing more than an assumption. Theprime example is Richard A. Posner's Economic Analysis of Law,20which is undoubtedly the single most important text in the field oflaw-and-economics. Posner devotes no more than a few sentences14. See id.15. See id.16. See id.17. See, e.g., Jonathan Cohn, Irrational Exuberance, New Republic, Oct. 25,1999, at 25 (describing the ascendancy of rational choice theory within prominentpolitical science departments and journals); James Ryerson, Games People Play:Rational Choice with a Human Face, Lingua Franca, DecJJan. 2000, at 61(describing rational choice theory generally and its influence within both politicalscience and law).18. See, e.g., Anthony Kronman, The Lost Lawyer 166 (1993) (stating thatlaw-and-economics is "the single most important change in American legal educa-tion in the last twenty-five years"); Mark Tushnet, Idols of the Right, Dissent, Fall1993 ("For a moment it seemed possible that Ulaw-and-economicsl would becomethe leading dialect, dominating the conversation of law; now it seems likely to beonly a specialized discourse, to be used or abandoned as seems helpful.")19. See Richard A. Posner, The Problems of Jurisprudence 187 (1990).20. See Richard A. Posner, Economic Analysis of Law (4th ed. 1992).[Vol. 6:1INTRODUCTIONof his 722-page work to this fundamental proposition. On the firstpage of the first chapter, Posner writes:As conceived in this book, economics is the science of rationalchoice in a world-our world-in which resources are limited inrelation to human wants. The task of economics, so defined,is to explore the implications of assuming that man is a ra-tional maximizer of his ends in life, his satisfactions-what weshall call his "self-interest."2 1How, one wonders, can so grand an edifice rest on a mereassumption?The title of our symposium comes from an article by AmartyaK. Sen, entitled Rational Fools: A Critique of the Behavioral Foun-dations of Economic Theory.22 In this article, Sen argues that ra-tional actor theory is flawed because people are more complex thanthe theory allows. Rational actor theory requires reducing a per-son's needs, desires, motives, impulses and moral judgments tosome kind of standard measure. Rational actor theorists see peo-ple as self-seeking egoists because "[it is possible to define a per-son's interests in such a way that no matter what he does he can beseen to be furthering his own interests in every isolated act ofchoice."23 That is, when an individual chooses x rather than y, ra-tional actor theorists conclude the individual preferred x to y, andthen assign a greater numerical value to the utility of x than theutility of y. Sen notes such a theory will appear to validate itselfevery time, except when the individual makes inconsistentchoices. 2421. Id. at 3 (footnote omitted) (emphasis added). Elsewhere, Posner hasstated this assumption in even stronger terms:The basic assumption of economics that guides the version of eco-nomic analysis of law that I shall be presenting is that people are rationalmaximizers of their satisfactions-all people (with the exception of smallchildren and the profoundly retarded) in all of their activities (exceptwhen under the influence of psychosis or similarly deranged through drugor alcohol abuse) that involve choice.Posner, supra note 19, at 353.22. Amartya K Sen, Rational Fools: A Critique of the Behavioral Foundationsof Economic Theory, 6 Phil. & Pub. Aff. 317 (1977).23. Id. at 322 (footnote omitted).24. See id. at 322-23. And, although Sen does not mention it, the rationalactor theorist can conclude that values have changed over time, i.e., the individualderived more utils of pleasure from vanilla yesterday but more utils of pleasurefrom chocolate today. We would simply say the individual wanted vanilla yester-200016 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 6:1Rational choice theory, Sen argues, is too simple, too reduc-tionist, because it assumes that all of a person's interests, welfare,ideas, and desires can be given one preference ordering.25 It canall be measured with the same yardstick. He continues:Can one preference ordering do all these things? A personthus described may be "rational" in the limited sense of re-vealing no inconsistencies in his choice behavior, but if he hasno use for these distinctions between quite different concepts,he must be a bit of a fool. The purely economic man is indeedclose to being a social moron. 26Despite the criticisms, rational choice theorists continue to ar-gue that people act rationally in all sorts of things-love, marriage,adoptions, pornography, taking drugs, playing the lottery-indeed,perhaps all pursuits.27 Some ridicule these views.28 Both sides inthe debate are now increasingly turning to cognitive psychology.Psychologists talk about bounded rationality, that is, limits to ra-tional thought and behavior. They talk about cognitive biases,which can be thought of as quirks or disruptions in rationality. 29They claim, as I understand them, that some cognitive biases arepredictable. The idea that people act irrationally in predictableways presents conflicting challenges and opportunities to bothsides in the debate. Proponents of rational choice theory see it as ameans of closing loopholes in their grand theory. They believe thatif we can understand when people will depart from their usual be-havior of acting rationally, and know how they will act even whenday and chocolate today, but the legal economist believes he has achieved a deeperunderstanding of behavior.25. See id.26. Id. at 335-36.27. See Gary S. Becker, The Economic Approach to Human Behavior (1976)(applying rational choice theory to a wide spectrum of activities including love,altruism and drug taking); Edward J. McCaffery, Why People Play Lotteries andWhy it Matters, 1994 Wis. L. Rev. 71 (applying rational choice theory to the lot-tery); Elisabeth M. Landes & Richard A. Posner, The Economics of the BabyShortage, 7 J. Legal Stud. 323 (1978) (applying rational choice theory toadoptions).28. See, e.g., Alan S. Blinder, The Economics of Brushing Teeth, 82 J. Pol.Econ. 887 (1974).29. A superb overview of the psychological literature can be found in Jon D.Hanson & Douglas A. Kysar, Taking Behavioralism Seriously: The Problem ofMarket Manipulation, 74 N.Y.U. L. Rev. 630 (1999); Jon D. Hanson & Douglas A.Kysar, Taking Behavioralism Seriously: Some Evidence of Market Manipulation,112 Harv. L. Rev. 1420 (1999).INTRODUCTIONthey are acting irrationally, we can refine the predictive power ofrational choice theory. Critics, on the other hand, argue that ifpeople act irrationally in predicable ways, they can be manipulatedby propaganda and advertising.Some of this is about technique. In the products liability field,we want to know whether we can help consumers make rationalpurchasing decisions and use potentially dangerous productssafely by furnishing them with information. To know that, wemust understand how much information consumers can absorband how they process information. But much more than techniqueis at stake. At bottom, this is a deep political argument. The de-bate today is, of course, no longer between collectivism or capital-ism; it is about how much regulation is desirable in a free marketeconomy. Those who believe that people are rational actors tend tobelieve that less regulation is necessary. Consumers can best takecare of themselves. Those who believe that people may often beirrational-and susceptible to manipulation by propagandists andadvertisers-favor more regulation.We decided that it would be useful not only to have legal schol-ars argue about the implications of cognitive psychology for prod-ucts liability, but to hear directly from the psychologiststhemselves. We are fortunate to have some of the nation's mostprominent cognitive psychologists and marketing experts partici-pate. They have much to teach us.20001

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