INTRODUCTION
In a perfectly competitive market, the law should simply give effect to the parties’ agreements (assuming, that is, that efficiency is all we care about). Real-world markets and real people are often a far cry from this ideal. Market failures (including behavioral ones) call for serious consideration of regulation. For decades, market regulation has focused on disclosure duties. However, mounting evidence suggests that such duties are often ineffective. Alongside endless attempts to make disclosures more effective – driven in part by ideological aversion to other modes of regulation, and in part by regulatory capture – there is growing disillusion about this path, which is shared by some law-and-economics scholars. In the past decade or so, there has been much enthusiasm about the use of nudges – ‘low-cost, choice-preserving, behaviorally informed approaches to regulatory problems’ – as a non-intrusive way to influence people’s behavior in desirable ways. However, there are increasing doubts about the effectiveness of nudges as well, especially when suppliers have an incentive to counter their effects …
Eyal Zamir (featuring Ian Ayres), A Theory of Mandatory Rules: Typology, Policy, and Design, Texas Law Review volume 99 issue 2 (2020).
First posted 2020-12-22 16:03:49
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