Private Law Theory

ABSTRACT
Governments and organizations increasingly use behavioral regulation (‘nudging’) to substitute for and complement traditional instruments, often treating it as ‘a free lunch’. However, a closer analysis of nudges reveals that they can generate substantial private costs rather than benefits alone. Nudges thus require the same cost-benefit scrutiny demanded of traditional regulation, but the quantification of nudge costs can be difficult and time-consuming, and is rare in practice. A rationality-effects analysis, based on a more nuanced understanding of how nudges change behavior, can indicate whether a given nudge is likely harmful, potentially beneficial, or should be prioritized for cost-benefit analysis before its implementation.

Tor, Avishalom, The Law and Economics of Behavioral Regulation (2022). 18 Review of Law and Economics (forthcoming 2022).

First posted 2022-04-21 11:00:06