The Limits of Behavioral Economics in Tort Law

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Daniel Pi
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Tort Law ◽  
Decision Makers ◽  
Punitive Damages ◽  
The Law ◽  
Substantive Law

Abstract Skeptics of rational choice theory have long predicted that behavioral economics would radically transform the legislation, adjudication, and analysis of law. Using tort law as an exemplar, this Article maps out the narrow set of conditions where substantive law can be modified to accommodate irrational decision-makers. Specifically, this Article demonstrates that if injurers are systematically biased, and the due care standard can be expressed quantitatively, and victims are unable to take meaningful precautions, then imposing punitive damages can induce irrational injurers to exercise efficient precautionary care. In all other cases, it is better that the law adopt a presumption of rationality, regardless whether individuals behave rationally in fact.

Two interpretations of the rational choice theory and the relevance of behavioral critique

2019 ◽  
Vol 31 (4) ◽  
pp. 464-489 ◽  
Author(s):  
Marek Hudik
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Utility Maximization ◽  
Decision Procedure ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Human Populations ◽  
Aggregate Level ◽  
Price Theory ◽  
Jel Codes

I compare two interpretations of the rational choice theory: decision-theoretic and price-theoretic. The former takes the assumption of utility maximization as a literal description of a decision procedure. The latter considers it as a modeling device used to explain changes/variability of behavior on an aggregate level. According to the price-theoretic interpretation, these changes/variability are explained by constraints (“prices”) rather than differences in intrinsic characteristics between human populations (“tastes”). While the decision-theoretic interpretation of rationality represents a possible foundation of the price-theoretic interpretation of rationality, I argue that it is not its only possible foundation. I then show that critiques raised by behavioral economics apply to the decision-theoretic interpretation and much less so to the price-theoretic one. From the perspective of the price theory, behavioral and rational choice models are predominantly complementary. Price-theoretic interpretation helps to explain why the rational choice theory continues to play an important role in economics, even after the behavioral revolution. JEL codes: D01, D03, B41, A10

Does the Law Change Preferences?

2021 ◽  
Vol 22 (2) ◽  
pp. 175-213
Author(s):  
Jennifer Arlen ◽  
Lewis A. Kornhauser
Keyword(s):  
Rational Choice ◽  
Social Norm ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Civil Law ◽  
The Self ◽  
Deterrence Theory ◽  
The Social ◽  
The Law

Abstract “I would prefer not” HERMAN MELVILLE, BARTLEBY THE SCRIVENER: A STORY OF WALL STREET (1853), reprinted in THE PIAZZA TALES 32, 48 (London, Sampson Low, Son & Co. 1856). Scholars have recently challenged the claim in classical deterrence theory that law influences behavior only through the expected sanction imposed. Some go further and argue that law may also “shape preferences,” changing people’s wants and values. In this Article, we analyze existing claims that criminal and civil law alter preferences and conclude that none suggest that the law shapes preferences. We first clarify this preference-shaping claim by elaborating the structure of rational choice theory generally and “preference” in particular. We then investigate three mechanisms of legal influence suggested by the preference-shaping literature: (1) the “serious harm” mechanism; (2) the “social norm” mechanism; and (3) the “self-improvement” mechanism. We then show that each of these mechanisms operates by changing the agent’s beliefs about the attributes or consequences of her choice options rather than by changing her preferences.

scholarly journals Rationalité, non-rationalité et théorie prospective : un programme de recherche sur la gestion des crises internationales

2005 ◽  
Vol 27 (1) ◽  
pp. 5-31
Author(s):  
Frank Harvey
Keyword(s):  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Decision Makers ◽  
Decision Models ◽  
Management Theory ◽  
Close Approximation ◽  
Ongoing Debate ◽  
International Crisis ◽  
Alternative Research

The strength of rational choice theory and the decision models derived from its axiomatic base (e.g., expected utility, game theory, deterrence, etc.) has always depended on the degree to which the theory's underlying assumptions offer at least a close approximation of reality. Proponents of political psychology have compiled what appears to be an impressive body of evidence against the utility of theories derived from these assumptions. Decision-makers, particularly in a time of crisis, are either unwilling or unable to live up to the demands of rationality. Conflicting empirical evidence from rational choice theorists continues to fuel the debate. In the absence of any attempt to identify areas of consensus, theoretical progress on the question of how to effectively manage international crisis mil remain elusive. In the conviction that this ongoing debate has become counterproductive to the development of crisis management theory, the following paper attempts, in part, to identify areas of consensus and to develop an alternative research agenda around Prospect Theory.

scholarly journals Normative rational choice theory: Past, present, and future

2015 ◽  
Vol 58 (2) ◽  
pp. 49-64 ◽  
Author(s):  
Bojan Krstic ◽  
Milos Krstic
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Utility Theory ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Expected Utility Theory ◽  
Normative Theory ◽  
Economic Literature ◽  
Economic Psychology ◽  
The Third

In this paper, we have tried to explain the normative turn in more recent work on experimental economics and behavioral economics. In section two, we discussed the various arguments that philosophers have offered in related to a normative interpretation of rational choice theory. We used the Friedman-Savage work on Expected Utility Theory as an example of the differences between the way that economists and philosophers see rational choice theory. We concluded that economists have traditionally equated the normative with ethically. In the third part, we examined the results of experimental and behaviorial economic literature with emphasis on the influence of experimental psychology. We presented a number of empirical anomalies and we agreed that representatives of economic psychology tend to view rational choice theory as a normative theory of rationality. In the last part, we examined some of the causes and consequences of the normative turn.

scholarly journals Designing and Implementing Effective Campus Sustainability in Saudi Arabian Universities: An Assessment of Drivers and Barriers in a Rational Choice Theoretical Context

2020 ◽  
Vol 12 (12) ◽  
pp. 5096 ◽  
Author(s):  
Mohammad A. Alsharif ◽  
Michael D. Peters ◽  
Timothy J. Dixon
Keyword(s):  
Saudi Arabia ◽  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Decision Makers ◽  
Supportive Leadership ◽  
Campus Sustainability ◽  
University Campuses ◽  
Strategic Direction ◽  
Organisational Factors

Saudi Arabia is a developing country that is experiencing a rapid growth in its population and level of urbanisation. Higher education (HE) in the country has developed rapidly over the last ten years, and it is still moving through numerous major reforms. Largely, the concept of sustainability has not yet been formally adopted in public institutions in a way that could sufficiently remedy the range of activities that currently impact negatively on the environment. The central aim of this paper is to examine the extent to which planning and action for sustainability is currently being taken on university campuses in Saudi Arabia, and to review the opportunities and challenges for encouraging and enabling further progress to this end. The research that the paper draws on specifically investigated the influence of decision makers’ personal knowledge and perceptions within Facilities and Project Management (FPM) departments at selected Saudi universities, and the constraints faced by FPM decision makers with regard to the promotion of sustainability on campus. This exploration was supported by the development of a theoretical framework that draws on rational choice theory (RCT). The research revealed mixed levels of prevailing knowledge and awareness towards sustainability among FPM decision makers within the case study university campuses. Cost notably came across as a dominant influence on FPM decision makers’ choices and decisions, and it undoubtedly plays an important role in shaping the decision-making process alongside other key organisational factors. A number of barriers facing the incorporation of sustainability emerged with clarity, such as the lack of supportive leadership, the lack of sustainability knowledge and awareness among senior management and an absence of sustainability-related legislation policy or strategic direction in the HEIs concerned.

Behavioral Contract Law

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Thomas S. Ulen
Keyword(s):  
Behavioral Economics ◽  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Contract Law ◽  
Theory Analysis ◽  
Contract Formation

Abstract This article explores some behavioral findings that are relevant to three areas of contract: formation, performance, and remedies. I compare the rational choice theory analysis of various aspects of contract law with how behavioral findings lead to a change in our understanding of that area of law. A penultimate section considers several criticisms of behavioral economics. A concluding section calls for altering some settled understandings of contract law to accommodate behavioral results and for further research about some still uncertain aspects of contracting.

Rational Choice Theory and the 1990 Party Merger in South Korea

OUGHTOPIA ◽  
2020 ◽  
Vol 35 (2) ◽  
pp. 247-282
Author(s):  
In-Kyun Kim ◽  
Myeong-Geon Koh
Keyword(s):  
South Korea ◽  
Rational Choice ◽  
Rational Choice Theory ◽  
Choice Theory

POLITICS-LAW CONVERGENCE OR DIVERGENCE? 'SMALL' POLITICAL PARTIES, REALPOLITIKAND SOUTH AFRICA'S 20 YEARS OF DEMOCRACY

2015 ◽  
Vol 2 (1) ◽  
Author(s):  
Kealeboga J Maphunye
Keyword(s):  
Game Theory ◽  
Political Parties ◽  
Rational Choice ◽  
Significant Role ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Democratic Consolidation ◽  
Secondary Research ◽  
Extant Literature ◽  
African Charter

This article examines South Africa's 20-year democracy by contextualising the roles of the 'small' political parties that contested South Africa's 2014 elections. Through the  prism  of South  Africa's  Constitution,  electoral legislation  and the African Charter on Democracy, Elections and Governance, it examines these parties' roles in South Africa's democratisation; their influence,  if any, in parliament, and whether they play any role in South Africa's continental or international engagements. Based on a review of the extant literature, official documents,  legislation, media, secondary research, reports and the results of South Africa's elections, the article relies on game theory, rational choice theory and theories of democracy and democratic consolidation to examine 'small' political parties' roles in the country's political and legal systems. It concludes that the roles of 'small' parties in governance and democracy deserve greater recognition than is currently the case, but acknowledges the extreme difficulty experienced by the 'small'  parties in playing a significant role in democratic consolidation, given their formidable opponent in a one-party dominant system.

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