Sunday, February 24, 2013 Behavioral Economics and Regulation Behavioral Economics and Regulation

Cass R. Sunstein
Harvard Law School
February 16, 2013

Forthcoming, Oxford Handbook of Behavioral Economics and the Law (Eyal Zamir and Doron Teichman eds.)

Behavioral economics is influencing regulatory initiatives in many nations, including the United States and the United Kingdom. The role of behavioral economics is likely to increase in the next generation, especially in light of the growing interest in low-cost, choice-preserving regulatory tools. Choice architecture -- including default rules, simplification, norms, and disclosure -- can affect outcomes even if material incentives are not involved. For example, default rules can have an even larger effect than significant economic incentives. Behavioral economics has helped to inform recent and emerging reforms in areas that include savings, finance, distracted driving, energy, climate change, obesity, education, poverty, health, and the environment.

Number of Pages in PDF File: 46

Keywords: behavioral economics, nudge, regulation, energy efficiency

JEL Classification: D003, D10, D11, D18, D60, D80, K0, K2

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