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Exponential Growth Bias And The Law: Why Do We Save Too Little, Borrow Too Much, And Fail To React On Time To Deadly Pandemics And Climate Change?, Doron Teichman, Professor Of Law, Eyal Zamir, Professor Of Commercial Law
Exponential Growth Bias And The Law: Why Do We Save Too Little, Borrow Too Much, And Fail To React On Time To Deadly Pandemics And Climate Change?, Doron Teichman, Professor Of Law, Eyal Zamir, Professor Of Commercial Law
Vanderbilt Law Review
Many human decisions, ranging from the taking of loans with compound interest to fighting deadly pandemics, involve phenomena that entail exponential growth. Yet a wide and robust body of empirical studies demonstrates that people systematically underestimate exponential growth.
This phenomenon, dubbed the exponential growth bias (“EGB”), has been documented in numerous contexts and across different populations, using both experimental and observational methods.
Despite its centrality to human decisionmaking, legal scholarship has thus far failed to account for the EGB. This Article presents the first comprehensive study of the EGB and the law. Incorporating the EGB into legal analysis sheds a …