On Contractual Defaults and Experimental Law and Economics

Abstract

Sloof et al.'s [2006] elegant study of default breach remedies illustrates both the potential and limitations of experimental law and economics (ELE). Potentially, the rigorous methodology of experimental economics can provide fully controlled tests of relationships among legally significant variables. Human behavior is context-dependent, however. The validity of ELE would therefore be limited if it were, for example, to disregard legal institutions and context in an automatic adherence to all conventions of experimental economics.

Keywords: experimental law and economics, behavioral law and economics, institutions

JEL Classification: C90, C91, K00, K12