The Paternalistic Turn in Behavioral Law and Economics: A Critique

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Mario J. Rizzo
Keyword(s):  
Public Policy ◽  
Behavioral Economics ◽  
Law And Economics ◽  
Consumer Credit ◽  
Standard Theory ◽  
Optimal Decisions ◽  
Normative Standard ◽  
Behavioral Law And Economics ◽  
True Preferences

Abstract The application of behavioral economics to law and economics has taken a paternalistic turn. Behavioralists believe that the fundamental assumptions regarding individual behavior in standard theory do not reflect reality. If individuals are not “rational” in the standard economic sense, then there will be decisionmaking failures: people cannot be relied upon to make individually optimal decisions and thus to maximize welfare as they see it. This Article is organized as follows. Part One is a prelude and gives context. Part Two discusses the fundamental normative standard in behavioral public policy: true preferences. I then proceed to outline the causes of the divergence between true preferences and actual observed preferences. Part Three analyzes some of the knowledge problems is ascertaining the presence of cognitive and behavioral biases. Part Four presents a case study of the difficulties of behavioral policy analysis in the area of consumer credit. Part Five concludes.

scholarly journals Changing People’s Preferences by the State and the Law

2021 ◽  
Vol 22 (2) ◽  
pp. 215-246
Author(s):  
Ariel Porat
Keyword(s):  
Behavioral Economics ◽  
Law And Economics ◽  
The State ◽  
The Other ◽  
Preference Change ◽  
Advantages And Disadvantages ◽  
Basic Assumptions ◽  
The Law ◽  
The One ◽  
Behavioral Law And Economics

Abstract In standard economic models, two basic assumptions are made: the first, that actors are rational, and the second, that actors’ preferences are a given and exogenously determined. Behavioral economics — followed by behavioral law and economics — has questioned the first assumption. This Article challenges the second one, arguing that in many instances, social welfare should be enhanced not by maximizing satisfaction of existing preferences but by changing the preferences themselves. The Article identifies seven categories of cases where the traditional objections to intentional preference change by the state and the law lose force and argues that in these cases, such a change warrants serious consideration. It then proposes four different modes of intervention in people’s preferences, varying in intensity, on the one hand, and in the identity of their addressees, on the other, and explains the relative advantages and disadvantages of each form of intervention.

Behavioral Economics and Contract Law

2014 ◽  
pp. 437-464
Author(s):  
Melvin A. Eisenberg
Keyword(s):  
Behavioral Economics ◽  
Law And Economics ◽  
Contract Law ◽  
Third Wave ◽  
Moral Principles ◽  
Behavioral Psychology ◽  
The Third ◽  
Behavioral Law And Economics ◽  
Available Information ◽  
Second Wave

Classical contract law, Chicago economics, and Chicago law-and-economics all assumed that people rationally maximize their utility. However, just as classical contract law was supplanted by modern contract law, so Chicago-style law-and-economics is being supplanted by a school of law-and-economics based on behavioral psychology or behavioral economics. The shift to behavioral law-and-economics, which is still under way, has arrived in three waves. The first wave showed that actors often make decisions without being fully informed, without adequately processing the available information, and without bringing to consciousness critical assumptions that underlay their decisions. The second wave showed that in certain areas, actors systematically make decisions that are not rational. The third wave shows that in making decisions, contracting actors are often motivated by moral principles as well as by wealth-enhancement.

MENGGAGAS PENDIDIKAN BERWAWASAN KEWIRAUSAHAAN DI PERGURUAN TINGGI ISLAM

ALQALAM ◽  
2017 ◽  
Vol 34 (1) ◽  
pp. 30
Author(s):  
Nur Hidayah
Keyword(s):  
Higher Education ◽  
Islamic Law ◽  
Law And Economics ◽  
State Institute ◽  
Study Program ◽  
Islamic Studies ◽  
Entrepreneurial Culture ◽  
Curriculum Structure ◽  
Islamic Values

There has been a concern over a high unemployment rate among graduates of Islamic higher education and a low proportion of entrepreneurs in Indonesia. In fact, a high proportion of entrepreneurs is one of indicators of a country’s welfare. This has generated a question: to what extent do Islamic values cultivate entrepreneurial culture among its adherents? How to cultivate entrepreneurial culture in Islamic higher education? This paper will investigate this matter using a case study of Faculty of Islamic Law and Economics at Banten State Institute for Islamic Studies.  The paper argues that the curriculum at the faculty of Islamic Law and Economics has not been oriented towards building entrepreneurial culture. The curriculum consists of subjects to enhance the students’ competence and skills to prepare them as bachelors of syari`ah economics for the professions such as manager, lecturer, researcher, syari`ah auditor, etc, instead of preparing them for entrepreneurs who are capable to build his or her own business from the scratch.    To propose Islamic entrepreneurship study program at the FSEI of IAIN SMHB, it is important to have a strong political will not only from the internal IAIN but also higher authoritative body such as the Ministry of Religious Affairs to facilitate this from not only the accreditation process but also financial support. A further feasibility study needs to be undertaken to build its infrastructure such as qualified lecturers, appropriate curriculum structure, and recruitment student system. Since this field has a strong link with a ‘real sector’, there has been an urgent need to build cooperations with business sector to enable the students to undertake their apprentice and build their networks to facilitate their ability to develop their own business.     Keywords: Islam, entrepreneurship, entrepreneurial education.

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