Behavioral Law and Economics

Abstract

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.

Judicial Incentives and Performance at Lower Courts: Evidence from Slovenian Judge-Level Data

“…Building on rational-choice approaches to legal research (see, e.g., Posner, 1993;Baum, 1994) and advances in behavioral economics (see, e.g., Jolls, 2007), the law 1 A significant portion of research on U.S. higher court judges examines judicial behavior from the judicial politics perspective; see, e.g., Epstein (2005). For a critique of empirical approaches to judicial behavior, see, e.g., Stith et al (2010).…”

Tax evasion and avoidance

“…Whereas in other fi elds of law and economics the insights of psychology and sociology have been applied only recently (Jolls, 2008), in the matter of tax evasion the social sciences have contributed from the earliest stages. Accordingly, no major behavioural revolution in the analysis of the phenomenon is to be expected.…”