Behavioral Law and Economics

Abstract

In the past few decades, economic analysis of law has been challenged by a growing body of experimental and empirical studies that attest to prevalent and systematic deviations from the assumptions of economic rationality. While the findings on bounded rationality and heuristics and biases were initially perceived as antithetical to standard economic and legal-economic analysis, over time they have been largely integrated into mainstream economic analysis, including economic analysis of law. Moreover, the impact of behavioral insights has long since transcended purely economic analysis of law: in recent years, the behavioral movement has become one of the most influential developments in legal scholarship in general. Behavioral Law and Economics offers a state-of-the-art overview of the field. The book surveys the entire body of psychological research underpinning behavioral analysis of law, and critically evaluates the core methodological questions of this area of research. The book then discusses the fundamental normative questions stemming from the psychological findings on bounded rationality, and explores their implications for establishing the aims of legislation, and the means of attaining them. This is followed by a systematic and critical examination of the contributions of behavioral studies to all major fields of law—property, contracts, consumer protection, torts, corporate, securities regulation, antitrust, administrative, constitutional, international, criminal, and evidence law—as well as to the behavior of key players in the legal arena: litigants and judicial decision-makers.

Framing in and through International Law

“…54 In general, how findings from behavioral and experimental research -primarily tested in the context of individual decision making -unfold within groups greatly depends on a wide array of factors: group characteristics, decision-making procedures, the object of decision, and the decision task, 55 while furthermore taking into account that PIL offers many instances of advice taking, which differs from group decision making in subtle ways. 56 However, it has been shown that groups could be more vulnerable to framing effects than individuals. 57 Groups may amplify framing effects because of the high likelihood for initial framing effects at the individual level to interact, in potentially destructive ways, with processes of social influence.…”

Beyond Rational Choice: International Trade Law and The Behavioral Political Economy of Protectionism

“…The reference point is also influenced by status of other people. 47 In the domain of gains, people exhibit risk aversion, whereas they are risk seeking in the domain of losses.…”

Demultilateralisation: A cognitive psychological perspective

“…The reference point is also influenced by the status of other people. 29 In the domain of gains, people exhibit risk aversion, whereas they are risk-seeking in the domain of losses.…”