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A Liberal Challenge to Behavioral Economics: The Case of Probability

10 Pages Posted: 30 Jan 2007 Last revised: 8 Oct 2007

Alex Stein

Brooklyn Law School

Abstract

This paper argues that Behavioral Economics (BE) needs to be liberally inclusive in formulating its criteria for rationality against which to evaluate people's cognitive ability and performance. The paper focuses on BE's assessment of people's probabilistic reasoning. It examines the famous Blue Cab experiment upon which several behavioral studies have grounded their assessment of an average person as probabilistically challenged. The paper identifies a number of flaws in that experiment. The most serious of these flaws is the confusion between cognitive performance and cognitive competence.

Keywords: Behavioral law and economics

Suggested Citation

Stein, Alex, A Liberal Challenge to Behavioral Economics: The Case of Probability. New York University Journal of Law & Liberty (Symposium on Behavioral Law & Economics' Challenge to the Classical Liberal Program), Vol. 2, 2007; Cardozo Legal Studies Research Paper No. 180. Available at SSRN: https://ssrn.com/abstract=960306

Alex Stein (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
718-780-0615 (Phone)

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