The Behavioral Divide. A Critique of the Differential Implementation of Behavioral Law and Economics in the US and the EU

11 European Review of Contract Law 299-345 (2015)

47 Pages Posted: 23 May 2015 Last revised: 7 Mar 2017

Date Written: May 22, 2015

Abstract

A behavioral divide cuts across the Atlantic. Despite the recent surge of behavioral analysis in European academia, a scrutiny of decisions by courts and regulatory agencies in the US and the EU reveals striking differences: While in the US rulings by courts and regulatory agencies progressively take insights from behavioral economics into account, EU courts and agencies still, and even increasingly, cling to the rational actor model. These inverse trends can be uncovered in the interpretation of legal concepts of human agency, i.e., of those elements in a legal order which refer, implicitly or explicitly, to a model of rationality of human actors. More particularly, this paper reviews the concepts of consumers and of users, in consumer law and product liability respectively, to underscore the claim of the behavioral divide.

Moreover, importantly, this divergence between EU and US private law theory and practice calls for a normative evaluation. In the face of empirical uncertainty about the existence, direction and intensity of biases, the most attractive legal concept of human agency is a pluralistic one, assuming the simultaneous presence of boundedly and fully rational actors. In concrete applications, this paper shows that a pluralistic perspective urges a revision of the concept of the reasonable consumer, both in US and EU consumer law. Furthermore, such a view leads to the adoption of a more boundedly rational user concept in product liability. The pluralistic, yet more boundedly rational concepts thus have far-reaching consequences both for private law theory and its concomitant case law.

Keywords: Behavioral Law and Economics, Behavioral Economics, Uncertainty, Contract Law, Consumer Law, Consumer Concepts, Product Liability, Products Liability, Comparative Law, Regulation, Legal Theory

JEL Classification: D81, D80, D10, K12, K13, K00

Suggested Citation

Hacker, Philipp, The Behavioral Divide. A Critique of the Differential Implementation of Behavioral Law and Economics in the US and the EU (May 22, 2015). 11 European Review of Contract Law 299-345 (2015). Available at SSRN: https://ssrn.com/abstract=2609531

Philipp Hacker (Contact Author)

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, Berlin 10099
Germany
+49 30 2093 3498 (Phone)

HOME PAGE: http://hu-berlin.academia.edu/PhilippHacker

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