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Debiasing Through Law

49 Pages Posted: 29 Jan 2006 Last revised: 30 Jul 2010

Christine Jolls

Yale Law School; National Bureau of Economic Research (NBER)

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2005

Abstract

In many settings, human beings are boundedly rational. A distinctive and insufficiently explored legal response to bounded rationality is to attempt to "debias through law," by steering people in more rational directions. In many important domains, existing legal analyses emphasize the alternative approach of insulating outcomes from the effects of boundedly rational behavior, often through blocking private choices. In fact, however, a large number of actual and imaginable legal strategies are efforts to engage in the very different approach of debiasing through law by reducing or even eliminating people's boundedly rational behavior. In important contexts, these efforts to debias through law can avoid the costs and inefficiencies associated with regulatory approaches that take bounded rationality as a given and respond by attempting to insulate outcomes from its effects. This paper offers a general account of how debiasing through law does or could work to address legal questions across a range of areas, from consumer safety law to corporate law to property law. Discussion is also devoted to the risks of government manipulation and overshooting that are sometimes raised when debiasing through law is employed.

Suggested Citation

Jolls, Christine and Sunstein, Cass R., Debiasing Through Law (November 2005). NBER Working Paper No. w11738. Available at SSRN: https://ssrn.com/abstract=842473

Christine Jolls (Contact Author)

Yale Law School ( email )

127 Wall Street
New Haven, CT 06520
United States
203.432.1958 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Cass R. Sunstein

Harvard Law School ( email )

1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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