Behavioral Law and Economics

Behavioral Law & Economics Goes to Court: The Fundamental Flaws in the Behavioral Law & Economics Arguments Against No-Surcharge Laws

The effort to answer questions concerning whether international law relevantly reflects the reality of international community, especially in terms of the explanatory capability, goes hand in hand with the study on the methodologies of international law. Twenty years ago, the interesting opportunity was given to seven methodologies of international law to express their respective strengths and weaknesses to handle with a given same international law questions. Positivism, policy-oriented jurisprudence, critical legal studies were invited at the feast of international law methodologies. Surprisingly, law and economics was also invited to it. Despite of its strength to explain cause and effect of international actors’ behavior through empirical approach, law and economics is not fully welcomed by international law scholars because its approach does not seem to pay due attention to the normative aspect of international law. Contrast with the passive reception of law and economics approach in the field of international law, law and economics is actively employed to improve effectiveness and efficiency of legal norms and institutions in the area of domestic law including contract law, criminal law and litigation procedure. Shared with the fundamental assumptions of neo-classical economics, law and economics explores effectiveness and efficiency of legal norms and institutions through the lens of the perfect rationality. Put it differently, law and economics usually begins its analysis on assumptions that Homo economicus has the perfect rationality which enables Homo economicus to make a rational choice at any circumstance. However, empirical and psychological experiments give much reason to doubt over assumptions of law and economics: Homo economicus is undoubtedly subject to the bounded rationality rather than the perfect rationality. With the help of cognitive psychology, behavioral law and economics based on behavioral economics fiercely challenges the unreality of law and economics. The core concepts including heuristics, framing effect, loss aversion and status quo bias are used as the powerful weapons by behavioral law and economics to expose the bounded rationality embodied in Homo economicus. As yet, international law does not appear to take behavioral law and economics seriously as a method of international law. There are lots of reasons to explain this phenomenon. Generally, the reluctance of international law scholars to apply economic analysis to international law can be suggested as the main reason. International law scholars criticize law and economics as an empty method because it does not focus on the normative nature of international law. In this sense, behavioral law and economics, which is harshly criticized by neo-classical economics, seems to have a hard time to occupy the right place in the international law methodologies. But this should not be the end of story. The main purpose of this article is to explore the usefulness of behavioral law and economics as a method of international law. Despite of its above mentioned weaknesses, advantages of behavioral law and economics clearly exist in the field of studies concerning how to design treaty text for the purpose of effective compliance, and to create a new international institutions’ mechanism to assist the cooperation of states regardless of their respective interests. Moreover, behavioral law and economics makes a bold attempt to redirect the path towards the studies of international law methodologies which is overwhelmingly dominated by the mainstream international law methodologies. In other words, behavioral law and economics discloses the hidden reason why international law scholars ardently sticks to the mainstream international law methodologies, especially positivism, despite of its incapability to address international law problems effectively. Behavioral law and economics can serve as a visible, enriching alternative and complement

Behavioral economics has in recent decades emerged as a prominent set of methodological developments that have attracted considerable attention both within and outside the economics profession. The time is therefore auspicious to assess behavioral contributions to particular subfields of economics such as labor economics. With empirical validity among its chief objectives, one might guess that behavioral economics would have made its clearest mark in data-driven subfields such as labor economics. Motivated in part by the question of why labor economics has been a relatively slow adopter of behavioral theory, this essay surveys a wide range of behavioral studies that address core labor issues. Part of the explanation is that labor economists working in the neoclassical tradition have been relatively frank in revealing shortcomings of the neoclassical theory and aggressive in empirically testing its predictions. Therefore, new work in behavioral labor economics may represent less of a methodological break than in other subfields of economics.

An Assessment of Behavioral Law and Economics Contentions and What We Know Empirically About Credit Card Use by Consumers

In recent years, behavioural economics has gradually entered the public domain. It attempts to incorporate human behaviour, psychology and cognitive knowledge into economic analysis and theory. Therefore, to a certain extent, behavioural economics also influences entrepreneurs' strategic decisions. In this paper, we will illustrate how behavioural economics can influence the behaviour of entrepreneurs through the reference dependence, endowment effects and mental accounting in behavioural economics theory. The paper also incorporates the case of Taobao to argue that the right decision making behaviour is one of the key factors for the success of a firm. In addition, the paper discusses the reasons behind the strategic decision making behaviour of entrepreneurs through heuristic techniques and prospect theory in behavioural economics. In the conclusion, the paper shows how entrepreneurs can make the right decisions through behavioural economics theory. It also briefly explains the evolution of the direction of economics research and where it is headed in the future.

Behavioural law and economics is one of the two most significant developments currently going on in legal scholarship. In this essay, I seek to describe, first, why behavioural law and economics is so important and to give a brief example of how it has altered the law-and-economic analysis of one significant area of substantive law—criminal law and punishment. Second, I discuss some criticisms of behavioural law and economics, finding that some of those criticisms have merit and raise serious issues that legal scholars should investigate further. I describe two recent articles that find a common behavioural policy prescription of using “nudges” to be not just ineffectual but damaging. Finally, I speculate on some differences between the structure of legal faculties and prevailing scholarly practices in Europe and North America that may have an impact on how quickly legal scholars in those two areas address the open questions in behavioural law and economics.

Authors from several disciplines -decision sciences, management, marketing, behavioral economics- have documented the existence of anomalies to the standard rational model of human behavior. Among several anomalies, the endowment effect is a key finding of this previous research. Few studies have explored the endowment effect in developing countries. This study reports the results of an experiment conducted in Chile to empirically analyze the endowment effect. Findings are consistent with previous international evidence suggesting the ownership itself produces value to consumers (and decision makers). Implications for marketing, management, business education and policy making practices are briefly presented.

Legal Politics and Cognitive Biases. Petraaycki's Legacy

Public international law scholarship opens evermore to social science theories and methodologies, but the implications of cognitive research and behavioural economics have not been systematically explored, even though they have been successfully applied to domestic legal issues and are increasingly used in public policy and regulation. In this symposium, we aim to fill two research gaps: first, international law and economics and international political economy rarely use behavioural insights, while behavioural law and economics lacks international dimensions, and, second, international political psychology sidesteps the importance of international norms. This introduction surveys the main psychological angles employed in the articles of the symposium as well as the difficulties envisioned in this research agenda of applying psychology to international law and using experiments for the study of international law. These difficulties notwithstanding, behavioural studies have generated many insights that have the potential to greatly enrich our understanding of international law.

Behavioral Economics in Urology: A Scoping Review.

This article gives an overview of recent discussions on behavioral economics and its importance both in reevaluating known instruments of environmental policy and in figuring out new instruments in this policy area. In reporting on recent discussions in behavioral economics, a distinction is made between (mostly experimentally) observed effects (e.g. the framing effect or the endowment effect) and concepts which try to generalize these effects theoretically (prospect theory and concepts of bounded rationality, for instance). Against this backdrop, contributions of behavioral economics which already take environmental instruments into account are systematized according to the instrument they focus on and according to the addressees they have in mind. On this basis, an assessment as regards the most important behavioral effects and insights in discussing issues of environmental policy is presented. This is accomplished by evaluating that part of the insights made in recent research of behavioral economics that have not yet been applied to the issue of environmental policy. It is here in particular that the concepts mentioned above come into play; going beyond a mere modification of canonical subjective utility theory then becomes a key analytical strategy in figuring out and assessing environmental instruments. Finally, the article sketches out potential avenues for further research towards a refreshed conceptual and instrumental framework for environmental policy.

Wrestling with the Endowment Effect, or How to Do Law and Economics Without the Coase Theorem

Behavioural economics combines psychology with economics, demonstrating how cognitive biases influence decision-making beyond the realm of rational choice theory. One of the most robust is the Endowment Effect, where individuals value owned items more than identical non-owned items. This study examines the influence of decision confidence on ownership, valuation, and exchange behaviour among undergraduate students in Pakistan. A quasi-experimental design was employed, with 112 students randomly assigned to receive either a book or a ceramic mug. Data on willingness-to-accept (WTA), willingness-to-pay (WTP), exchange decisions, and decision confidence were collected through structured questionnaires. Results revealed that a large majority (81%) reported high confidence in their decisions (p = .001), supporting Hypothesis 1. Confidence was also linked to greater reluctance to exchange items, indicating that it reinforced decisiveness in ownership choices. However, Hypothesis 2 was not supported, as confidence did not significantly influence monetary valuations (r < .12, p > .39). These findings suggest that while confidence drives rigidity in ownership decisions, it does not inflate economic value. The study contributes to behavioural economics by highlighting confidence as a factor that strengthens decisiveness rather than valuation, and by providing evidence from a non-Western context, offering insights relevant for educators, policymakers, and marketers.

Behavioral economics and health-care markets

The chapter introduces behavioral law and economics. It is divided into three sections. The first section describes the history of behavioral law and economics since the late 1970s. The second section discusses the methodologies used in this sphere, including the emergence of empirical legal studies. Empirical legal studies include lab-experimental, observational, and field-experimental studies—the last category comprising randomized field experiments and natural experiments. Finally, the chapter analyzes the challenges facing this emerging, cross-disciplinary perspective. These challenges include critiques of the psychological studies that form the basis of behavioural law and economics, such as the issues of external validity of laboratory experiments. They also include difficulties in integrating behavioural insights into economic analysis of law.