Regulating Internalities

Forthcoming, Journal of Policy Analysis and Management

23 Pages Posted: 1 Mar 2015

See all articles by Hunt Allcott

Hunt Allcott

New York University (NYU)

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 2 versions of this paper

Date Written: February 27, 2015

Abstract

This paper offers a framework for regulating internalities. Using a simple economic model, we provide four principles for designing and evaluating behaviorally-motivated policy. We then outline rules for determining which contexts reliably reflect true preferences and discuss empirical strategies for measuring internalities. As a case study, we focus on energy efficiency policy, including Corporate Average Fuel Economy (CAFE) standards and appliance and lighting energy efficiency standards.

Keywords: Internalities, behavioral economics, fuel economy, energy efficiency

JEL Classification: D03, D10, D18, D61, D83, H21, K00, K20, L51, L94, Q48

Suggested Citation

Allcott, Hunt and Sunstein, Cass R., Regulating Internalities (February 27, 2015). Forthcoming, Journal of Policy Analysis and Management. Available at SSRN: https://ssrn.com/abstract=2571343

Hunt Allcott

New York University (NYU) ( email )

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Cass R. Sunstein (Contact Author)

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Harvard University - Harvard Kennedy School (HKS) ( email )

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