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The Law and Economics of Behavioral Regulation

Author

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  • Tor Avishalom

    (University of Notre Dame, Notre Dame, USA)

Abstract

This article examines the law and economics of behavioral regulation (“nudging”), which governments and organizations increasingly use to substitute for and complement traditional instruments. To advance its welfare-based assessment, Section 1 examines alternative nudging definitions and Section 2 considers competing nudges taxonomies. Section 3 describes the benefits of nudges and their regulatory appeal, while Section 4 considers their myriad costs—most notably the private costs they generate for their targets and other market participants. Section 5 then illustrates the assessment of public and private welfare nudges using cost-benefit analysis, cost-effectiveness analysis, and rationality-effects analysis.

Suggested Citation

  • Tor Avishalom, 2022. "The Law and Economics of Behavioral Regulation," Review of Law & Economics, De Gruyter, vol. 18(2), pages 223-281, July.
    • Handle: RePEc:bpj:rlecon:v:18:y:2022:i:2:p:223-281:n:3
    DOI: 10.1515/rle-2021-0081
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    More about this item

    Keywords

    nudge; rationality; bounded rationality; regulation; cost–benefit analysis; cost-effectiveness analysis; rationality-effects analysis;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • K29 - Law and Economics - - Regulation and Business Law - - - Other

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