The Behavioral Economics of Behavioral Law & Economics
Review of Behavioral Economics, Vol. 5, No. 3-4, pp. 439-471
34 Pages Posted: 20 Sep 2018 Last revised: 16 Jan 2019
Date Written: September 19, 2018
Behavioral Law & Economics (BLE) has loudly proclaimed its victory over traditional law & economics methodologies. Nowhere has this proclamation been so loud or self-certain as with respect to claims about consumer financial decision-making. Drawing on a set of casual observations styled as empirical proof, BLE scholars have called for a variety of regulatory interventions that are claimed to be necessary to protect consumers. But examining two detailed case studies here, one involving credit card usage by consumers and the other involving claims about consumer behavior in response to cash discounts and credit card surcharges, it is shown that these claims are simply incredible, in the sense that it is literally difficult to believe that unbiased scholars would find those studies to be even slightly persuasive. Possible explanations for this disconnect between the weakness of the underlying science and the widespread social acceptance of the theories by BLE scholars are discussed.
Keywords: credit cards, surcharging, behavioral law & economics
JEL Classification: D11, D12, D18, D91
Suggested Citation: Suggested Citation