Behavioral Law & Economics goes to Court: The Fundamental Flaws in the Behavioral Law & Economics Arguments Against No-Surcharge Laws

Abstract

In this article we examine the merits the arguments furthered by the field of behavioral law and economics over credit card surcharge fees. Claims about the real-world application of behavioral economic theories should not be uncritically accepted — especially when advanced to challenge a state’s commercial regulation on constitutional grounds. And courts should be especially careful before relying on such claims where the available evidence fails to support them, where the underlying theories are so poorly developed that they have actually been employed elsewhere to support precisely opposite arguments, and where alternative theories grounded in more traditional economic reasoning are consistent with both the history of the challenged laws and the evidence of actual consumer behavior.

Keywords: Behavioral Economics, Behavioral Law and Economics, Consumer Finance, Consumer Protection, Corporate Governance, DG Comp, Financial Regulation, First Amendment, Payments, Surcharging