Article
The Paternalistic Turn in Behavioral Law and Economics: A Critique
Review of Law & Economics
(2021)
Abstract
The application of behavioral economics to law and economics has taken a paternalistic turn. Behavioralists believe that the fundamental assump- tions 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 orga- nized 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 prob- lems 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.
Keywords
- paternalism,
- knowledge problem,
- shrouding,
- true preferences
Disciplines
Publication Date
December 13, 2021
DOI
https://doi.org/10.1515/rle-2021-0056
Citation Information
Mario J Rizzo. "The Paternalistic Turn in Behavioral Law and Economics: A Critique" Review of Law & Economics Vol. 17 Iss. 2 (2021) p. 253 - 280 ISSN: 1555-5879 Available at: http://works.bepress.com/mario_rizzo/71/