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Articles 1 - 2 of 2
Full-Text Articles in Behavioral Economics
Behaviorism In Finance And Securities Law, David A. Skeel Jr.
Behaviorism In Finance And Securities Law, David A. Skeel Jr.
All Faculty Scholarship
In this Essay, I take stock (as something of an outsider) of the behavioral economics movement, focusing in particular on its interaction with traditional cost-benefit analysis and its implications for agency structure. The usual strategy for such a project—a strategy that has been used by others with behavioral economics—is to marshal the existing evidence and critically assess its significance. My approach in this Essay is somewhat different. Although I describe behavioral economics and summarize the strongest criticisms of its use, the heart of the Essay is inductive, and focuses on a particular context: financial and securities regulation, as recently revamped …
Behavioral Economics And Insurance Law: The Importance Of Equilibrium Analysis, Tom Baker, Peter Siegelman
Behavioral Economics And Insurance Law: The Importance Of Equilibrium Analysis, Tom Baker, Peter Siegelman
All Faculty Scholarship
Because choosing insurance requires consumers to assess risks and probabilities, the demand for insurance has proven to be fertile ground for identifying deviations from rational behavior. Consumers often shun the insurance against large losses that they rationally should want (e.g., floods); and they are attracted to insurance against small losses (extended warranties, low deductibles) that no rational individual should purchase. But the welfare consequences of behavioral anomalies in insurance are complex, because consumers’ irrational behavior takes place in a market profoundly shaped by informational asymmetries. Under some conditions, deviations from rational behavior may actually generate insurance market equilibria that produce …