scholarly journals Rational Choice, Behavioral Economics, and the Law

1998 ◽  
Vol 50 (5) ◽  
pp. 1551 ◽  
Author(s):  
Richard A. Posner
2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Daniel Pi

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.


2019 ◽  
Vol 31 (4) ◽  
pp. 464-489 ◽  
Author(s):  
Marek Hudik

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


2020 ◽  
Vol 2 (95) ◽  
pp. 143-152
Author(s):  
Milka Malfait ◽  
◽  
Yurii Nadtochey ◽  

2020 ◽  
Vol 6 (3) ◽  
pp. 109-114
Author(s):  
Ekaterina A. Koroleva

The article deals with the main provisions of Richard Posners book How judges think, which is, according to the authors own assessment, an attempt by an American scientist to understand the motives that guide judges in making judgments. The emphasis Posner puts on psychology leads to the fact that the book gives the right to talk about how judges think, not about judicial behavior: considering traits, temperament, race and gender, as well as personal and professional experience. From all the above Richard Posner concludes that judges are guided by the rationality of actions and decisions. Therefore, special attention in this article is paid to the concept of rationality from the point of view of Posner himself, as well as the assessment of this concept from the point of view of Russian scientists V.L. Tambovtsev and L.V. Smorgunov, since this concept of rational choice reveals the essence of economic analysis of law. Special attention should be paid to the argument that according to Richard Posner, rational choice does not have to be without error in the conditions of lack of information or the complexity of its collection and analysis. The arguments of Henry Beckett, as one of the founders of the economic analysis of law, on rationality in the Commission of an offense are given. Also, the article considers the facts that allow to state that at present the economic analysis of the law has gone far beyond the initial attention to Antimonopoly regulation, taxation, regulation of public utilities, corporate Finance and other usual areas of economic regulation, the range of issues that can be resolved through economic analysis of the law is much wider and more diverse. According to the results of races-judgements and the estimation of economic analysis of law and the category of rationality in the legal field.


Author(s):  
Eyal Zamir

Kahneman and Tversky’s prospect theory is probably the most influential contribution to behavioral economics, and loss aversion is the most important element of this theory: Losses loom larger than gains. This chapter surveys the effect this notion has had on legal theory. It first provides an overview of the vast psychological literature on loss aversion. It then demonstrates the contribution made by studies of loss aversion in several contexts that are of particular interest to the law, including consumer behavior and litigation and settlement. The chapter further discusses the possibility of triggering loss aversion through legal framing, focusing on two examples: default rules and burden of proof. It also suggests that there is a striking correspondence between loss aversion and basic features of the law, and offers possible explanations for this correspondence. Finally, the chapter briefly discusses some of the normative implications of loss aversion for the law.


2021 ◽  
Vol 22 (2) ◽  
pp. 175-213
Author(s):  
Jennifer Arlen ◽  
Lewis A. Kornhauser

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.


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