The Proper Scope of Behavioural Law and Economics

2021 ◽  
pp. 19-36
Author(s):  
Christoph Engel
Keyword(s):  
Transaction Cost ◽  
Law And Economics ◽  
Division Of Labour ◽  
Behavioural Economics ◽  
Free State ◽  
Formal Institutions ◽  
Legal Intervention ◽  
State Of Nature ◽  
Legal Problems ◽  
Simple Economic

Behavioural law and economics applies the conceptual tools of behavioural economics to the analysis of legal problems and legal intervention. These models, and the experiments to test them, assume an institution-free state of nature. In modern societies, the law’s subjects never see this state of nature. However, a rich arrangement of informal and formal institutions creates generalised trust. If individuals are sufficiently confident that nothing too detrimental will happen, they are freed up to interact with strangers as if they were in a state of nature. This willingness dramatically reduces transaction cost and enables division of labour. If generalised trust can be assumed, simple economic models are appropriate, but they must be behavioural, since otherwise individuals would not want to run the risk of interaction.

Preference Change and Behavioral Ethics: Can States Create Ethical People?

2021 ◽  
Vol 22 (2) ◽  
pp. 85-110
Author(s):  
Yuval Feldman ◽  
Yotam Kaplan
Keyword(s):  
Law And Economics ◽  
Moral Awareness ◽  
Preference Change ◽  
Behavioral Ethics ◽  
Legal Intervention ◽  
Discriminatory Behavior ◽  
Ethics Research ◽  
Actual Change ◽  
Current Article ◽  
The Law

Abstract Law and economics scholarship suggests that, in appropriate cases, the law can improve people’s behavior by changing their preferences. For example, the law can curb discriminatory hiring practices by providing employers with information that might change their discriminatory preference. Supposedly, if employers no longer prefer one class of employees to another, they will simply stop discriminating, with no need for further legal intervention. The current Article aims to add some depth to this familiar analysis by introducing the insights of behavioral ethics into the law and economics literature on preference change. Behavioral ethics research shows that wrongdoing often originates from semi-deliberative or non-deliberative cognitive processes. These findings suggest that the process of preference change through the use of the law is markedly more complicated and nuanced than previously appreciated. For instance, even if an employer’s explicit discriminatory stance is changed, and the employer no longer consciously prefers one class of employees over another, discriminatory behavior might persist if it originates from semi-conscious, habitual, or non-deliberative decision-making mechanisms. Therefore, actual change in behavior might necessitate a close engagement with people’s level of moral awareness. We discuss the institutional and normative implications of these insights and evaluate their significance for the attempt to improve preferences through the different functions of the legal system.

scholarly journals Consumer Inertia, the New Economy and EU Competition Law

2018 ◽  
Vol 2 (1) ◽  
pp. 47-53
Author(s):  
Vladimir Bastidas Venegas
Keyword(s):  
Law And Economics ◽  
New Economy ◽  
Behavioural Economics ◽  
Information Costs ◽  
Long Term Effects ◽  
Default Option ◽  
Customer Base ◽  
Economics Literature ◽  
The Status ◽  
Social Media Platforms

Services and goods in the new economy, such as social media platforms and applications, are often offered to end-consumers for “free”. This may cause problems for the application of traditional antitrust doctrines, such as tying or other forms of leveraging, which normally have been applied to products and services offered at a price. As illustrated by the Microsoft I decision (Windows Media Player), it is not self-evident that the bundling of an application with an operating system results in coercion, the pressure to consume the “tied” product, if consumers have a de facto possibility to download competing products for free. Moreover, the availability of competing products for free may also affect the long-term effects in the market, as both the existing customer base and new customers may easily shift their consumption, which decreases potential “lock-in” effects. This propensity and capability of customers to choose products or services other than the predefined “default” option, e.g. by being included in a bundle, was also relevant in the recent Google decision (Shopping), which concerned the company’s preferential placement of its own advertising messages in internet searches. In both Microsoft I and the Google decision, it was found that consumers were unable to choose products and services other than the default option, so-called consumer inertia. Consumer inertia has been explained both by the traditional law and economics literature and behavioural economics with switching costs, information costs and the status quo bias. Accordingly, this article explores the concept of consumer inertia in the light of the law and economics literature, in particular behavioural economics, to determine the factors which are relevant for establishing the presence of consumer inertia in individual antitrust cases concerning the new economy. Moreover, the article evaluates to what extent the use of consumer inertia in cases from the Union courts and the Commission is consistent with economic theory.

Economic Approaches to Regulation

2010 ◽  
pp. 16-38 ◽  
Author(s):  
Cento Veljanovski
Keyword(s):  
Legal System ◽  
Law And Economics ◽  
Competition Law ◽  
Regulatory Reform ◽  
Social Regulation ◽  
Economic Regulation ◽  
Economic Theories ◽  
System P ◽  
The Subject ◽  
Simple Economic

Economics has been at the heart of regulatory reform beginning with the wave of deregulation and privatisations of the 1980s. This article focuses on economic theories of regulation, and the way economics has been used to design and evaluate regulation. As the title of this article suggests, there are a number of economic approaches. However, these all share the conviction that relatively simple economic theory can assist in understanding regulation, and providing practical tools for regulators to make regulation more effective and efficient. The subject matter of the economics of regulation covers at least four broad areas — economic regulation, social regulation, competition law, and the legal system. Here a broader view is taken encompassing competition and merger laws, and the field known as law-and-economics or the economics of law is illustrated which looks at the legal system.

scholarly journals Analisis Persepsi dan Biaya Transaksi Terhadap Sumber Kredit Usaha Pengolahan Ikan Asin

2021 ◽  
Vol 11 (1) ◽  
pp. 1-12
Author(s):  
Nurul Maulina ◽  
Dwi Rachmina ◽  
Suprehatin Suprehatin
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Analysis Method ◽  
Information Costs ◽  
Formal Institutions ◽  
Cost Component ◽  
Informal Credit ◽  
Average Value ◽  
Salted Fish ◽  
Credit Institutions

The growth and development of MSMEs are hampered due to capital constraints, so that MSMEs need other sources of capital to meet their business needs, one of which is with credit. In Muara Angke Traditional Fisheries Processing (PHPT) there are formal and informal credit institutions. The decision-making process of which credit institution will be chosen is determined by the processor's perception of the two institutions, where each institution will incur different transaction costs incurred by salted fish processors. The purpose of this study was to analyze the perceptions of salted fish processors on credit institutions and the amount of credit transaction costs incurred. The perceptual analysis uses the importance-performance analysis method and transaction costs are calculated using the transaction cost analysis method. The total sample of 72 salted fish processing business units in PHPT Muara Angke. The results showed that based on the criteria of processing perceptions of formal institutions better. This is indicated by the measurement of the average value of formal interests 4,48, the average value of the performance of formal institutions is 4,04 while the average value of the interests of non-formal institutions is 4,16 and the average value of the performance of non-formal institutions is 3,99. However, the transaction costs per loan period that must be issued by processors with formal credit (Rp 126.750) are greater than the transaction costs incurred by processors with non-formal credit (Rp 15.434). The largest transaction cost component informal credit is implementation costs (62,60 per cent), while informal credit is information costs (36,37 per cent).

Commons in the Past and the Future of Law and Economics

Global Jurist ◽  
2019 ◽  
Vol 19 (3) ◽  
Author(s):  
Aleksandar Stojanovic
Keyword(s):  
Economic Theory ◽  
Transaction Cost ◽  
Economic Activity ◽  
Law And Economics ◽  
Institutional Arrangements ◽  
Analytic Framework ◽  
Yale University ◽  
The Past ◽  
The Future

Abstract This article explores the role of commons in law and economics under the assumption that its strength (following Calabresi. 2016. The Future of Law and Economics: Essays in Reform and Recollection. Yale University Press) comes from the ability to amplify economic theory by integrating elements of institutional reality into the analytic framework. Following an analysis of the role that the spoilage of commons has played in the early developments of the transaction cost framework, the article considers the ways in which the success of commons could amplify the law and economics further. I conclude these costs could be conceptualized by extending Calabresi’s own past work on the role of values in institutional arrangements in the direction of understanding the contributions and losses of different arrangements concerning the capacity of values motivate economic activity.

Rational Choice and Rational Cognition

Legal Theory ◽  
1997 ◽  
Vol 3 (2) ◽  
pp. 183-203
Author(s):  
Jules L. Coleman
Keyword(s):  
Economic Theory ◽  
Cognitive Psychology ◽  
Rational Choice ◽  
Folk Psychology ◽  
Law And Economics ◽  
Economic Models ◽  
Intentional Action ◽  
Human Action ◽  
Legal Problems

There is a close but largely unexplored connection between law and economics and cognitive psychology. Law and economics applies economic models, modes of analysis, and argument to legal problems. Economic theory can be applied to legal problems for predictive, explanatory, or evaluative purposes. In explaining or assessing human action, economic theory presupposes a largely unarticulated account of rational, intentional action. Philosophers typically analyze intentional action in terms of desires and beliefs. I intend to perform some action because I believe that it will (is likely to) produce an outcome that I desire. This standard “belief-desire” model of action invokes what philosophers of psychology and action theorists aptly refer to as a “folk psychology.”

scholarly journals Economic Considerations of Legal Delimitation: Evidence from Judicial Verdicts in Bangladesh Courts

2021 ◽  
Vol 13 (3) ◽  
pp. 115-135
Author(s):  
Mohammad Dulal Miah ◽  
Mohammed Usman ◽  
Yasushi Suzuki
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Important Implication ◽  
Social Cost ◽  
Law And Economics ◽  
Transaction Cost Theory ◽  
Judicial Decision ◽  
Judicial Decisions ◽  
New Information ◽  
Economic Considerations

The literature on law and economics argues that economic considerations have an important implication for consistent and efficient legal practices. In line with this tradition, this paper aims to analyse legal verdicts through the lens of transaction cost to ascertain if judicial decision takes social cost into account. In so doing, the research draws upon the literature of transaction cost theory, which examines the implications of transaction cost for legal verdicts. Data for the analysis consist of legal verdicts collected from Bangladesh. The paper shows that judicial decisions are influenced by economic matters, especially social and transaction costs. When the issue of these costs is clear, judges take this into consideration in deciding who should own what rights. This research contributes to the literature of law and economics by providing new information, which is believed to help regulators, policymakers, and legal practitioners in deciding value-creating property rights.

scholarly journals Behavioural Economics and its Implications on Regulatory Law

2015 ◽  
Vol 15 (2) ◽  
pp. 89-102
Author(s):  
Jana Bellová
Keyword(s):  
Government Policy ◽  
Law And Economics ◽  
Behavioural Economics ◽  
Government Policies ◽  
Field Of Study ◽  
Specific Field ◽  
Current Trends ◽  
Regulatory Law ◽  
History Of ◽  
Do So

Abstract The aim of this article is to analyse the possible implications of behavioural economics on regulatory law and government policy. In order to do so it first introduces and in short describe the current trends in behavioural economics through a quick look into the aim and history of this relatively new and innovative field of economics. Th e article then analyses the combination of this field of study with law in the form of a rather specific field of study called behavioural law and economics. The analyses of the possible impact on government policies and the regulation in certain areas then follow and result in suggestions of further possible interactions between law and economics.

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