The Legal Regulation of Self-Serving Bias

Abstract:     
This paper considers two questions about the role of self-serving biases in legal conflict: when are they a problem worth worrying about, and what can the law do to ameliorate them? With respect to the first question, the paper argues that not all self-serving biases are of equal concern. We should distinguish between self-serving predictions, which have the potential to create significant inefficiencies, and self-serving judgments of fairness, which have a more complicated normative standing and in some instances may not be problematic at all. Second, once a bias is found objectionable there are a number of possible strategies for dealing with it; the paper proposes a distinction between personal and structural strategies. Personal strategies are attempts to take people likely to be in the throes of self-serving biases and "debias" them. Structural strategies are attempts to put distance between biased parties and decisions their biases might affect. There are practical strategies that fit each of those descriptions, and others that fall between them; the paper suggests that structural strategies tend to be preferable to personal strategies, but also more expensive, and that the law may already be taking most steps that would be optimal to reduce disputants' problematic self-serving biases and their impact.

Number of Pages in PDF File: 29

JEL Classification: K1, K10, K19, K40

working papers series