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Mistaken About Mistakes

26 Pages Posted: 5 Oct 2017  

Kathryn Zeiler

Boston University - School of Law

Date Written: September 2017

Abstract

Theoretical work in behavioral economics aims to modify assumptions of standard neoclassical models of individual decision-making to better comport with observed behavior. The alternative assumptions fall into at least two categories: nonstandard preferences and psychological mistakes. Applications of behavioral economics models in law, however, tend to assume that deviations from standard neoclassical models are meant to build in psychological mistakes that produce regrettable choices. Often follow-on policy prescriptions suggest interventions that either help individuals choose correctly or go further to substitute the “correct” choices for those that mistake-prone individuals might choose in error. Such policy prescriptions are ill suited in cases where the applied behavioral economics model assumes non-standard preferences as opposed to psychological mistakes. This essay provides examples of models in each category and examples of mistaken applications of models that assume non-standard preferences rather than psychological mistakes. It also suggests ways to avoid errors when applying behavioral economics theories in law.

Keywords: Behavioral Economics, Legal Scholarship, Rationality, Psychological Mistakes

Suggested Citation

Zeiler, Kathryn, Mistaken About Mistakes (September 2017). European Journal of Law and Economics, Forthcoming; Boston Univ. School of Law, Law and Economics Research Paper No. 17-43. Available at SSRN: https://ssrn.com/abstract=3047907

Kathryn Zeiler (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

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