Law Commons^™

Government Regulation Of Irrationality: Moral And Cognitive Hazards, Jonathan Klick, Gregory Mitchell

All Faculty Scholarship

Behavioral law and economics scholars who advance paternalistic policy proposals typically employ static models of decision-making behavior, despite the dynamic effects of paternalistic policies. This Article considers how paternalistic policies fare under a dynamic account of decision making that incorporates learning and motivation effects. This approach brings out two important limitations on the efficiency effects of paternalistic regulations. First, if preferences and biases are endogenous to institutional forces, paternalistic government regulations may perpetuate and even magnify a given bias and cause other adverse psychological effects. Second, for some biases, it will be more efficient to invest resources in debiasing than …