Behavioural Economics and Contract Law
Date
2014-05-30Author
Estado
info:eu-repo/semantics/publishedVersionMetadata
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. Individuals make economic decisions on a daily basis that do not look rational and that sometimes turn out to be mistakes. This behaviour has a cost for each individual and for society as a whole. Behavioural law and economics identifies which mental shortcuts used by individuals in decision making are behind
those mistakes. Once cognitive biases affecting people are determined, behavioural law and economics propose to use the information gathered to design a set of rules that reduces individual and collective losses. This
set of rules would steer people to rational choices that set them better-off and produce social welfare, but this
would be done without banning or blocking choices; each individual would be free to choose an action which
goes against the socially good for behavioural economists. Therefore, behavioural law and economics might
be a new approach to be taken when dealing with contract law situations where intervention is considered
necessary. This paper tries to explain the main features of behavioural law and economics while questioning
the validity of its assumption that people are not rational. In addition, this paper addresses the problem of intervention in some grounds of contract law and takes a stand on whether it is desirable a strong intervention,
a lighter one based on behavioural law and economics, or a neoclassical approach in favour of free market and
freedom of contract with restrictions on them being an exception
Behavioural Economics and Contract Law
Tipo de Actividad
Capítulos en librosPalabras Clave
.: behavioural law and economics, rationality, cognitive biases, contract law