Market, Financial and Political Power And the Distinctive Behavioral and Cognitive Attributes and Deficiencies Of Power and the Powerful

Abstract

The social psychology literature has been developing and expanding in breadth and influence over the past nearly 100 years. This literature has strong links and important differences with behavioral economics, neuroeconomics, and neuroscience. However, unlike many of the other behavioral literatures, social psychology has mainly addressed social relationships and contexts, and has rarely been applied directly to business, market, network, policy, legal and regulatory contexts, actors, issues and decision making. The purpose of this paper is to bring a social psychology and behavioral lens to market, economic, financial, political, and other forms of power and power asymmetries. Emphasis is placed on the cognitive miser, stereotyping and narcissistic tendencies and other quite distinctive behavioral and cognitive attributes and deficiencies of powerful people and by extension their firms, other regulated entities, competition and other regulatory authorities, and other powerful organizations. One of the major strengths of social psychology and other behavioral literatures is that they extend the fundamental economic principle of scarcity to the human brain, including the scarce time, energy, interest, information, attention span and cognitive resources of powerful leaders and their organizations.

The paper’s major argument is that the insights from social psychology and related behavioral literatures on power, the powerful and the manifold nuances, complexities and paradoxes of power, can contribute significantly: to the design and administration of competition, consumer protection, product safety, privacy, and other regulatory regimes; and to the enforcement, deterrence, compliance promotion, outreach, education, and other strategies, functions, messaging and persuasions of competition and antitrust authorities and other state and non-state regulators with mandates to promote fair competition, consumer welfare, and fair and efficient markets. More specifically, the working paper argues that the unique and distinctive behavioral and cognitive attributes and deficiencies of power and the powerful should be addressed by competition, antitrust, and other state and non-state regulators when they are assessing the anticompetitive and other effects of market power in product, geographic, labour, financial, digital, political, and other markets.

One of the most important, or at least provocative, insights from the social psychology literature on power and the powerful is that the interventions of competition/antitrust and other regulatory authorities to reduce market power and concentration and power asymmetries in product, geographic, financial, digital, political, and other markets could generate benefits that go well beyond lower prices and larger quantities produced and supplied, to encompass many other and much broader economic, social, equity, behavioral, psychological and political benefits. Further research on and application of these social psychology and related behavioral insights would contribute to addressing and mitigating the concerns and criticisms of the antitrust populist/progressive movement in the United States and other competition policy and law critics elsewhere in the global economy. Better understanding the distinctive behavioral and cognitive attributes of power and the powerful brings a new perspective to many of these complex, formidable and “wicked” problems and issues as the global economy hopefully enters the post-COVID era as of December 2022.

Keywords: competition policy and law, regulatory compliance and performance, abuses of market power, social psychology of power and the powerful

JEL Classification: D18, D22, K21, K23