Behavioral Law and Economics

Cambridge Series on Judgment and Decision Making

by Cass R. Sunstein (Editor)

This exciting volume marks the birth of a new field--a field that studies law with reference to an accurate, rather than a crude, understanding of human behavior. Behavioral Law and Economics presents new findings in cognitive psychology and behavioral economics, which show that people are frequently both unselfish and over-optimistic; that people have limited willpower and limited self-control; and that people are "boundedly" rational, in the sense that they have limited information-processing powers, and frequently rely on mental short-cuts and rules of thumb. Understanding this kind of human behavior has large-scale implications for the analysis of law, in areas including environmental protection, taxation and tax compliance, constitutional law, voting behavior, punitive damages for civil rights violations, labor negotiations and strikes, and corporate finance. Behavioral Law and Economics offers many new insights into these fields and suggestions for legal reform. With a better knowledge of human behavior, it is possible to predict the actual effects of law, to see how law might actually promote society's goals, and to reassess the questions of what law should be doing.

Genres: Law, Economics

448 pages, Paperback

First published January 1, 2000

About the author

Cass R. Sunstein is an American legal scholar, particularly in the fields of constitutional law, administrative law, environmental law, and law and behavioral economics, who currently is the Administrator of the White House Office of Information and Regulatory Affairs in the Obama administration. For 27 years, Sunstein taught at the University of Chicago Law School, where he continues to teach as the Harry Kalven Visiting Professor. Sunstein is currently Professor of Law at Harvard Law School, where he is on leave while working in the Obama administration.

Reviews

[Marcel Santos · Rating 4 out of 5]

A collection of academic papers on the theme. You’d better have already read the more basic books about Behavioral Economics before jumping into this one, because it deals with the field’s basic concepts but not necessarily explains them.

It seems clear that there is still no closed framework theory on the theme as there is in Law & Economics — and perhaps will not be. Or at least not along the same lines.

This is the result of the incorporation of Behavioral Psychology into Economics applied to Law. By now, the field is characterized by the recognition of several episodic ways most of the people think, even if wrongly (heuristics and biases), and the authors recognize them in contracts, Court litigation and the making of law, and propose analytic approaches and possible solutions.

It seems it will become harder to make a closed theory out of it when the analyses depend to a great extent on making practical experiments. Not to say that the closer you get into humans’ minds, the more complicated and difficult to theorize it gets. The tendency of Economics advancing toward this direction seems inescapable, though.

[Arjun · Rating 3 out of 5]

Very important area -- the thing about academic law is that its authors seem to make careers on writing book reports about the research of others. That said, this is a pretty darn good compendeum of book reports..