Behavioral Economics, the Law, and the Regulators

Truth on the Market is hosting an online forum on behavioral law and economics, the “Free to Choose?” symposium. So far, people like David Levine, Ronald Mann and Christopher Sprigman have taken their turns. “Behavioral economics itself has made a significant contribution to increasing our understanding of when individual decision-making deviates from the rationality assumption at the heart of the conventional microeconomic theory,” writes Josh Wright in the Introduction. “Behavioral law and economics now reaches all corners of the law. The rise of behavioral economics raises interesting sets of questions both within the domain of economics itself: what are the costs and benefits of the intersection of psychology and economics? What explains the remarkable success of behavioral economics in the behavioral law and economics literature? Will the phenomenon have staying power? Is it in fact the case that behavioral law and economics is gaining traction in the current regulatory landscape?” Related: see Matt Ridley‘s very good Wall Street Journal piece about Slavisa Tasic‘s very interesting paper asking whether regulators are as irrational (if not more so?) than the rest of us. [%comments]