More Behavioral vs. More Economic Approach: Explaining the Behavioral Divide between the US and the EU

34 Pages Posted: 6 Dec 2015 Last revised: 7 Mar 2017

Date Written: December 4, 2015

Abstract

While US courts and regulatory agencies have set sail towards what may be dubbed a “more behavioral approach”, their European counterparts still mostly navigate the charted waters of a neoclassical “more economic approach”, as first advocated in EU competition law. This paper claims that this “behavioral divide” can be explained by a theory of social norms and expectations.

Two decisive factors are uncovered that drive the behavioral divide: first, the trust a society places in the self-ordering forces of individual and market behavior (ts); and second, the degree to which each individual is supposed to contribute to a cognitively demanding collective social project (cs), such as the construction of an internal market in the EU. A high score on either variable in this model leads to the adoption of a more rational concept of human agency. Historical changes in the social norms and expectations expressed by these variables can be credited for the inverse tendencies in the US and the EU. Arguably, the more individualistic social conception of the US leads to a greater sensitivity to empirical, i.e., behavioral findings. By contrast, the European political project has long been driven by the construction of an ever closer union on the basis of a single market. This overriding goal could significantly inhibit the long-term prospects of behavioral law and economics in the practice of European law.

Other factors play a lesser role in the explanation of the behavioral divide: diverging mandatory risk regulation, differences in legal education, and the distinct political economy of nudging. The latter refers to the potential of bridging otherwise insurmountable political differences in times of political institutional gridlock by behaviorally informed legal strategies. However, this may well prove a potent force in the future if the EU continues on its deplorable path to an ever greater political and ideological divide. This political dimension may thus create a tendency cutting against the current move toward more rational models of human agency in EU law.

Keywords: behavioral law and economics, behavioral economics, more economic approach, EU law, consumer law, product liability, social norms, comparative law, legal history

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

Suggested Citation

Hacker, Philipp, More Behavioral vs. More Economic Approach: Explaining the Behavioral Divide between the US and the EU (December 4, 2015). 39 Hastings International and Comparative Law Review 366-388 (2016). Available at SSRN: https://ssrn.com/abstract=2699082 or http://dx.doi.org/10.2139/ssrn.2699082

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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