University of Tennessee Legal Studies Research Paper No. 106
60 Pages Posted: 2 Apr 2010 Last revised: 28 Jun 2011
Date Written: March 31, 2010
Competition policy is entering a new age. Interest in competition laws has increased world-wide, and the United States no longer holds a monopoly on antitrust policy. In the aftermath of the financial crisis, the question for competition authorities is whether and to what extent does bounded rationality, self-interest and willpower matter. This article explores how the behavioral economics literature will advance competition policy. With increasing interest in the United States and abroad in the implications of behavioral economics for competition policy, this Article first provides an overview of behavioral economics. It next discusses how the assumption of rational, self-interested profit maximizers became so embedded in competition policy. The Article then discusses to what extent the behavioral economics literature can inform antitrust policies, and provides several recommendations related to the practical application of behavioral economics to competition policy going forward.
Keywords: Antitrust, Behavioral Economics, Competition Policy, Sherman Act, Monopolization, Cartels
JEL Classification: K21, L40, L41, L42, L44
Suggested Citation: Suggested Citation