Posted by: Patrick Allen Foster | August 7, 2013

Links and Papers on Behavioral Economics and Such

Some vaguely connected links:

1. In the Boston Review, William H. Simon has a review of Cass R. Sunstein’s book, Simpler: The Future of Government. (H/T: Frank Pasquale.) An excerpt:

The nudge approach is influenced by ideological strategy as well as by social science. Sunstein seems to think that for liberalism to reclaim the support it has lost in recent decades the key task is to find common ground with the libertarian right. Hence he emphasizes the liberty-respecting dimension of choice-architecture regulation. A good part of the book engages libertarian critiques of government respectfully, indeed timidly. Sunstein also shares the libertarian focus on the danger of excessive, as opposed to insufficient, regulation.

And from the conclusion:

The biggest current liability for liberals is that many people have lost faith in the capacity of government to solve the problems they care about. Perhaps the most prominent of these problems are unemployment, economic inequality, the deterioration of the natural environment, and national security. The behaviorist toolkit is not much help here.

2. Lawrence Solum links to a paper by Tom Ginsburg, Jonathan S. Masur, and Richard H. McAdams (University of Chicago Law School), “Libertarian Paternalism, Path Dependence, and Temporary Law” (University of Chicago Law Review, forthcoming):

The recent wave of behavioral economics has led some theorists to advocate the possibility of “libertarian paternalism,” in which regulators designing institutions permit significant individual choice but nonetheless use default rules to “nudge” cognitively biased individuals toward particular salutary choices. In this article, we add the possibility of a different kind of nudge: temporary law. Temporary law is less intrusive than permanent regulation, and is particularly attractive in situations in which we believe that path dependence has produced the status quo. We illustrate the argument with the example of smoking bans, and provide an empirical case study of an actual temporary smoking ban in Champaign, Illinois.

3. Also, Prof. Solum links to a paper by Michael D. Ramsey (University of San Diego School of Law), “The Supremacy Clause, Original Meaning, and Modern Law” (Ohio State Law Journal, Vol. 74, 2013, forthcoming):

Under the U.S. Constitution, if federal interests conflict with state law, when must the latter give way? Although the Constitution’s text appears to resolve the question in Article VI’s supremacy clause, important recent scholarship argues that an approach anchored by the supremacy clause’s text cannot provide a practical account of modern law nor useful guidance for the future. More broadly, these critiques use the example of the supremacy clause to cast general doubt upon text-based originalism as a practical tool for resolving modern disputes. This article defends a textual approach to key modern issues of supremacy, including executive foreign affairs preemption, preemptive federal common law, and non-self-executing treaties. It finds that, while modern doctrine and modern conceptions of law differ somewhat from the outlook of the founding era, these differences are not insurmountable obstacles: a combination of text and stare decisis, as indicated by the Supreme Court’s approach to executive preemption in Medellin v. Texas, can supply workable solutions to modern supremacy debates. The article thus suggests that conventional academic concerns over the practicality of text-based originalism may be considerably overstated.

4. Noah Smith: “Some essential papers in behavioral finance”: “at least since the 80s, finance researchers have been noticing ‘anomalies’ in the predictions of efficient-market theories and mainstream risk models. Attempts to explain these anomalies, or to dig up more of them, loosely fall under the heading of ‘behavioral finance’, probably because in the 80s, behavioral economics was just becoming popular. But behavioral finance isn’t just behavioral econ applied to finance; it includes a whole big eclectic mix of ideas and observations about market institutions, overall market movements, and information processing, and at this point is really just ‘anything that isn’t efficient-markets finance’. The literature is really all over the place. But here are a few foundational papers to get you started.” A good overview.


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