37 Pages Posted: 24 Dec 2010 Last revised: 14 Feb 2012
Date Written: December 23, 2010
This symposium contribution discusses the interplay between Neo-Chicago antitrust and Behavioral Antitrust. Neo-Chicago appears to be defined as a return to Chicago principles, informed by the developments in economic thinking over the past 30-or-so years. Its most visible contribution is a formal adoption of the error-cost framework from then-Professor Easterbrook’s influential 1984 article, The Limits of Antitrust. At least as articulated by Easterbrook, the error cost framework is a politically charged, economic-theory based rule of decision, which contains at its core a deregulatory preference for false negative error over false positive error. But there is more to Neo-Chicago than the mere formal adoption of an error-cost framework. Behavioral Antitrust has the feel of being something quite new. Professor Tor wrote the earliest article explicitly proposing a behavioral approach to antitrust in 2002. Proponents encourage courts and policy-makers to import the study of behavioral law and economics into the rules of decision in antitrust, using empirical study to achieve a fuller understanding of the conduct of individuals in market settings. Behavioral Antitrust is on its face result-neutral, but as it has been studied to date, it might be argued to have a political slant. All of the writing on Behavioral Antitrust of which I am aware favors enforcement. Neo-Chicago and Behavioral Antitrust came along at about the same time, and a marriage of the two might temper the respective tendencies toward predetermined political ends. The combination might produce a result-neutral enterprise of economically informed antitrust. Neo-Chicago’s premise of correcting for the errors of Chicago, which included the oversimplification of facts in pursuit of tractability, leading to what have been argued to be false understandings of marketplace conduct and effects, suggests its adherents might be receptive to the lessons of Behavioral Antitrust better to understand the forces driving individual economic actors. Behavioral Antitrust’s goal of informing the assumptions underlying established economic theory through empirical study of the behavior of individual economic actors suggests its adherents might look to Neo-Chicago for a comprehensive theoretical framework for their analysis.
Keywords: antitrust, behavioral economics, law and economics
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