Who Are You Calling Irrational?

20 Pages Posted: 12 Jul 2015 Last revised: 26 Apr 2016

See all articles by Aneil Kovvali

Aneil Kovvali

Wachtell, Lipton, Rosen & Katz

Date Written: July 11, 2015

Abstract

Cass Sunstein is the leading advocate of "nudges" – small policy interventions that yield major impacts because of behavioral quirks in the way that people process information. Such interventions form the core of Sunstein’s philosophy of "libertarian paternalism," which seeks to improve on individuals’ decisions while preserving their freedom to choose. In "Why Nudge?", Sunstein forcefully defends libertarian paternalism against John Stuart Mill’s famous Harm Principle, which holds that government should only coerce a person when it is acting to prevent harm to others. Sunstein urges that unlike more coercive measures, nudges respect subjects’ goals, even as they reshape their choices. Using an analogy to voting paradoxes, this Review shows that reconciling multiple, inconsistent goals is a fundamentally challenging problem; the challenge leaves even deliberative individuals vulnerable to manipulation through nudges. The fact of inconsistent goals means that government regulators who deploy nudges select and impose their own objectives, instead of merely advancing the goals of the regulated. The analogy also highlights that multimember legislative bodies are subject to many of the same quirks as individuals, raising questions about the government’s ability to improve on individuals’ choices.

Keywords: Nudges, Behavioral Economics, Administrative Law

JEL Classification: D00, D72, K23

Suggested Citation

Kovvali, Aneil, Who Are You Calling Irrational? (July 11, 2015). Northwestern University Law Review, Vol. 110, No. 3, 2016. Available at SSRN: https://ssrn.com/abstract=2629700

Aneil Kovvali (Contact Author)

Wachtell, Lipton, Rosen & Katz ( email )

51 West 52nd Street
New York, NY 10019
United States

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