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date: 18 February 2020

(p. 807) Subject Index

(p. 807) Subject Index

abortion, 73–74, 78, 246
active choice requirements, 737–738. See also nudges
actively open-minded thinking, 21
adolescent risk taking, 181
affect heuristic, 17, 335, 340
affective forecasting
basic properties of, 101–102
criminal law and, 108–110
endowment effect and, 322
set point of individual happiness and, 101–102
tort law and, 107–108
Affordable Care Act
breastfeeding and, 242
disclosure requirements in, 728–730
employer mandate and, 734
insurance law and, 491–492, 495, 513
National Federation of Independent Businesses v. Sebelius and, 254
Allais paradox, 346
altruism, 32, 79–80, 117, 200
ambiguity aversion
contract law and, 345, 349
definition of, 336
gains versus losses and, 344–345
plea bargaining and, 345–346
risk aversion and, 345
subjects’ perceived competence and, 345
taxation and, 346
anchoring effects
judicial decision-making and, 678–680
litigation and settlement and, 627, 636
plea bargaining and, 657
antitrust law
aftermarket power and, 551–552
behavioral law and economics research and, 550–561
bundling and, 552
cartels and, 555–556
firms’ behavior and, 545–550
firms’ learning and, 545–546
market behavior and, 542–546
market entry and, 552–554
overoptimism bias and, 553, 557
predation and, 541, 544, 554
rational choice theory and, 540–541
resale price maintenance (RPM) and, 557–559
selection mechanisms and, 544–545
tying and, 541, 543–544, 551–553
unexploited market power and, 554–555
Aronson v. Lewis, 529
Asian Disease problem (Kahneman and Tversky), 79, 154–155
AT&T Mobility v. Concepcion, 478
attribute substitution heuristic, 17
attribution bias
evidence law and, 711, 713
overoptimism bias and, 337–339, 524, 711, 713, 769–770
availability heuristic
contract law and, 446, 449–450, 452
criminal law and, 583–585
environmental law and, 762
evidence law and, 704–706, 713
insurance law and, 501
litigation and settlement and, 627
tort law and, 414, 418–419
Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), 105
Bayesian probability theory, 3–4, 667, 669
behavioral ethics
automaticity of morality and, 219
(p. 808) automaticity of self-interest and, 215–218
automatic reasoning and, 220–221, 227, 231
awareness and, 218
blind spots and, 231–232
bounded ethicality and, 222–224
conflicts of interest and, 230–231
debiasing and, 228–229
disambiguation and, 230–231
egotism and, 218
embodiment and, 216–217
ethical fading and, 223
fairness and, 224, 226
limitations of, 213, 226
limited-awareness problem and, 231
micromanagement and, 233
moral cleansing and, 224
moral disengagement and, 223–224
moral hypocrisy and, 221, 223
moral licensing and, 223–224
motivated reasoning and, 217, 220, 222
normative implications of, 226–229
nudge approach and, 227–228
physiological research and, 217, 221n6
priming and, 216–218, 228
prosocial behavior research and, 214
reflection and accountability and, 231–232
regulating situations and, 231–232
self-concept maintenance and, 222–223
self-interest and, 214–226
shaming and, 225
social norms and, 224–225
statistical unethicality and, 229–230
two-systems theory and, 215–216, 219–220, 227, 230–231
Behavioral Insights Team (United Kingdom), 481, 483
behavioral law and economics (BLE). See also empirical methods in behavioral law and economics
analytical methods in, 177–182
biased-samples perspective and, 173
commitment to empirical evidence and, 171
consequentialist approach and, 183–184
domain-specific phenomena and, 172, 177, 184
dread risks and, 170
economists’ criticisms of, 112–115
fuzzy-trace theory and, 173–174
goal-based decision-making and, 175–176
law and economics research and, 167–172, 175
legal academic criticisms of, 115–119
motivational assumptions in, 175–177
naturalistic decision-making and, 175
normality bias and, 184
personal autonomy–based criticisms of regulations based on, 119–120
prescriptive interventions and, 170–172, 179, 181–183
rational choice theory challenged by, 93, 95–97, 101–102, 111–114, 116, 143, 164, 167–172, 175, xi
rationality assumptions in, 168–175
rejections of efficiency in, 183
tautological problems with, 117, 197
utility maximization and, 182–184
Belgium, 100
benevolent biasing, 158–161, 164
bias, definition of, 5, 145. See also specific biases
biasing. See also debiasing
benevolent biasing and, 158–161, 164
cognitive leveraging and, 158, 161–164
deliberation costs and, 159–160
double biasing, 162
environmental law and, 160–162
misinformation campaigns and, 159–160
second-order effects and, 160
BillShrink.com, 482
Bite Club (video game), 106
blood donation, 250
boards of directors
diversity and, 530–533
groupthink and, 530, 532
independence of, 529–531, 533
in-group versus out-group dynamics in, 529, 533
Sarbanes-Oxley Act and, 151n19, 157, 533
women and, 530–531
bounded willpower, 117, 146, 648–649, 660
Brady v. Maryland, 656
breastfeeding, 242
broken windows theory, 588
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp, 540–541
(p. 809) bundling, 552
burden of proof
endowment effect and, 326–327
hindsight bias and, 367
loss aversion, 280–281
varieties of, 134, 280–281
Business Judgment Rule, 368
calibration, 8
capital punishment, 255
cartels, 555–556
certainty effect
Allais paradox and, 346
circumstantial evidence and, 336, 348
Clean Air Act and, 349
common ratio effect and, 347
definition of, 344
delayed payouts’ impact on, 347–348
emotionally salient outcomes and, 347, 349
environmental law and, 348–349
probabilistic insurance and, 348
Superfund site cleanups and, 348
Charlotte (North Carolina), 254
Chicago Tribune, 243
Children’s Health Insurance Program, 734
Choquet Expected Utility Theory, 413
cigarette smoking
change in social meaning of, 85, 248–249, 251, 740
moral attitudes and, 242, 248–252
overoptimism bias and, 162–163, 341–342, 724
second-hand smoke and, 248–249, 251, 255
Clayton Act, 541
Clean Air Act, 349
Coase Theorem, 97, 301–302, 310–311, 313, 329
cognitive leveraging, 158, 161–162, 164
Community Living Assistance Services and Supports Act (CLASS Act), 734
Competition Commission (United Kingdom), 501, 505, 508
conformism, 44
congruence heuristic, 14
consequentialism, 67, 182–184, 288. See also utilitarianism
Consumer Financial Protection Bureau (CFPB), 107, 479, 481, 484, 731
consumer transactions. See also contract law
add-on products and, 470
annual cost-of-ownership information and, 481
behavioral economics theory of, 466–474
behavioral market failure and, 467–468
collective-action problems and, 469–470, 496
competition’s role in, 468–469
comprehensive disclosures for sellers and, 482–483
consumer misperceptions and, 466, 468–472, 475–477, 480, 487
contract complexity and, 471–473
default rules and, 483–484
deferred costs and, 473–474
disclosure of product-attribute information, 479
disclosure of product use regulation and, 480–481
distorted competition and, 475–476
distributional concerns and, 476–477
hindered competition and, 475
imperfect information and, 467–468, 479
imperfect rationality and, 467–476, 479, 481–482, 486
learning from mistakes and, 470–471
mandatory rules and, 477–478
market corrections and, 469–471
myopia and, 474, 482
overoptimism bias and, 468, 474, 482
perceived net benefits versus actual net benefits and, 467–469
right to withdraw provisions and, 484–486
safe harbors and, 484
simple disclosure for consumers and, 481–482
teaser-rate contracts and, 468
total-cost-of-ownership (TCO) information and, 481
welfare implications of, 475–477
contract law. See also Consumer transactions
acceptance by mail and, 438–439
availability heuristic and, 446, 449–450, 452
behavioral law and economics discipline and, 442–447
(p. 810) bounded rationality and, 442–443
“Chicago” law and economics discipline and, 441–442
cognitive psychology and, 445–447
defects in capability and, 446–447
defects in cognition and, 450–453
defects in disposition, 445–446
deferred exchange and, 206
expectation damages and, 454, 458–461
express conditions and, 450–453
forfeiture principle and, 450–451, 462
formalism and, 438–441
form contracts and, 455–456
informed parties assumption and, 442–443
in-kind relief versus monetary relief, 459, 461
liquidated damages and, 448–450
loss aversion and, 275, 446–447, 454–455
modern contract law and, 441
moral considerations and, 459–460
mutual mistakes and, 453
option theory of contracts and, 457–459
overoptimism bias and, 445–446, 449, 452, 455
punitive damages and, 460–461
rational choice theory and, 439, 441–446
rational ignorance and, 443, 455
relational contracting and, 206–207
resale paradigm and, 458–459
social propositions’ role in, 438–441
tacit assumptions and, 444–445
telescoping faculties and, 447, 449
theory of efficient breach and, 457–459
unconscionability and, 448, 451
unexpected circumstances and, 453–455
corporate and securities law
academic defenses of, 521–523
assumption of market accuracy in, 526
boards of directors and, 151, 528–533
confirmation bias and, 526
corporate governance and, 519, 523–528, 530
corporate managers and, 519–522, 524–528
disclosure requirements and, 518, 525–527, 534
efficient market assumptions and, 521
fiduciary duties and, 208, 518–520, 522–523, 527, 529, 533–534
hindsight bias and, 357, 527
judicial deference and, 520–521
overoptimism bias and, 525
prosocial behavior and, 207–209
rational choice theory and, 518–521, 523–524, 526–527, 534
Sarbanes-Oxley Act and, 151n19, 157, 533
sell-side securities analysts and, 525
shareholders and, 519–522, 526–527, 529, 533
voluntariness and, 519–523
credit cards. See also consumer transactions
complexity of contracts for, 471
Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), 477, 483–484
credit limits and, 483–484
deferred costs and, 473–474
disclosure requirements and, 480–481
overoptimism bias and, 341, 470
perceived net benefit versus actual net benefit and, 467–468
regulation of late fees for, 477
criminal law
actual punishment and, 572, 583
affective forecasting and, 108–110
availability heuristic and, 583–585
behavioral economics research and, 574–590
bounded rationality and, 571
broken windows theory and, 588
communicative theory and, 571
criminals’ risk propensities and, 573–574, 576, 579–581, 583–585
crowding out behavior and, 587
decision utility, 590–592, 594
discounting of the future bias and, 573, 577, 579
distributive justice and, 569–570
duty of rescue and, 586–587
expected punishment and, 572–573, 575–579, 585, 588
experienced utility, 590–592, 594
happiness research and, 590–594
hindsight bias and, 358–359
law and economics research and, 570–576
(p. 811) neoclassical economic analysis of, 568–570
overoptimism bias and, 585–586
perceptions regarding justness of law and, 588–589
positive duties and, 586–587
prediction versus postdiction in, 581–583
probability of detection considerations and, 109–110, 158–160, 568, 571–573, 575–579, 583–588, 590
prospect theory and, 579–581
public interest and, 594–595
rational choice theory and, 571–574, 589
retributive justice and, 569–570, 590, 592–594
rules versus standards in, 582–583
social norms theory and, 587–588
subjective disutility and, 591–594
uncertainty effect and, 577–580
date rape, 256
Daubert v. Merrell Dow Pharmaceuticals, 708
Debiasing. See also biasing
adjudicative forms of, 153–154, 156, 163
agency law and, 157
behavioral ethics and, 228–229
blind spot bias and, 152
changing preferences and, 145–147
corporate law firms and, 156
deliberation costs and, 153, 159–160, 162
endowment effect and, 157
framing effects and, 154–155
incentive alignment and, 147, 153, 162
insulation and, 149–152, 157, 164
juries and, 154–156
litigants and, 156
market failures and, 158, 161
search costs and, 153
self-correction and, 152–153
substantive forms of, 153–154, 156
thin versus thick rationality and, 146–147
default rules
active choice requirements as alternative to, 737–738
automatic enrollments and, 721–722, 733–737
basic properties of, 97–98
consumer transactions and, 483–484
endowment effect and, 304, 323–325
environmental law and, 748, 757–758, 769
health care and, 728–729, 734
loss aversion and, 279–280
as means of combating inertia, 735–736
nudges and, 721, 733–739
organ transplants and, 98–100, 272
retirement savings and, 733–734
school meals and, 734
Delaware Chancery, 208
deontology, 75–78, 286–288
Department of Agriculture (USDA), 728
Department of Education, 732
Department of Labor, 732–733
descriptive theory of decision-making, 4–5, 9–10
deterrence
distribution of goods and bads and, 82
tort law and, 81, 409, 413–415, 418–420, 423–424, 432
diabetes, 132
dictator game
basic rules in, 32
equity theory and, 64
heterogeneity of outcomes in, 177–178
prosocial behavior and, 198–200
similarity to no-liability regimes and, 415n7
disclosure requirements
clarity and, 729
competition and, 731–732
summary disclosure versus full disclosure, 727, 732–733
discounted utility, 7–9
Discover Bank v. Superior Court, 478
distribution of goods and bads, 80–82
docility, 78
Dodd-Frank Financial Reform Act, 477, 481, 484, 731
“do no harm” heuristic, 14, 17
Doorways to Dreams (D2D) Fund, 106
double biasing, 162
(p. 812) dread risks, 170
drunk driving, 583
Eastman Kodak Co. v. Image Technical Services, 551
Emergency Planning and Community Right-to-Know Act of 1986, 732
eminent domain, 378, 381
empirical methods in behavioral law and economics
causality and, 132–133
design economics and, 180
difference estimation and, 132–133
endogeneity problems and, 133
external validity and, 129, 131, 135, 138, 179–180
field evidence and, 130–133
instrumentation and, 133
internal validity and, 129, 135–136, 138
lab research and, 130–131, 135–136
meta-analysis and, 138
qualitative methods’ advantages and, 137
quasi experiments and, 140
replication of findings and, 133–134, 138, 179, 181
simulation and, 137
survey research and, 130–131, 133–134
vignette studies and, 130–131, 134
endowment effect
affective forecasting problems and, 322
agents versus principals and, 306–307, 323
alternative endowments and, 304–305
among nonhuman primates, 314
assigning entitlements and, 318–321
attachment to substantive endowments and, 313–314
burden of proof and, 326–327
causes of, 311–317
Coase Theorem and, 300–302, 311, 313, 329
contingent valuation surveys and, 301–302
controlled experiments demonstrating, 302–303
creators versus noncreators and, 320–321
criticism of, 113–114
debiasing and, 157
default rules and, 304, 323–325
economic analysis of law and, 318–328
environmental entitlements and, 315, 327–328
environmental law and, 754, 764, 766–767
evolutionary theory and, 313–314
facilitating private interactions and, 323–326
goods held for exchange and, 114
laboratory experiment practices and, 307–310
legitimacy norms and, 315
liquidity constraints and, 312
loss aversion and, 149, 268, 270, 272–273, 275, 291, 312–317
market mimicking entitlement assignments and, 318–319
market participation’s impact on, 305–307
market substitutes and, 305
nonrivalrous endowments and, 320–321
nudges and, 723
offer-asking gap and, 301
plea bargaining and, 648, 659
pricing experiments and, 307–309
property law and, 384–385
property rules versus liability rules and, 327
query theory and, 317
redistributing rights and, 321–323
reference points and, 303–304
regret avoidance and, 315–317
regulatory inertia and, 321
rules protecting entitlements and, 326–328
taxation and, 600–601, 618
trading experiments and, 309–310
transactional disutility, 314–315
wealth effects and, 311–312
willingness to accept (WTA) and, 270, 273, 302–303, 305–309, 311–316, 318–322, 324–328
willingness to pay (WTP) and, 270, 273, 302–303, 305–309, 311–316, 318–322, 324, 326, 328, 769
environmental law
affect bias and, 753–754
availability cascades and, 753, 760
availability heuristic and, 762
biasing and, 160–162
(p. 813) “cancer premium” and, 762–763
certainty effect and, 348–349
coal ash regulations and, 763–764
cognitive dissonance and, 768
commensuration and, 751
cost-benefit analysis (CBA) and, 748, 750–753, 759–760, 763, 769–770, 773–775
default rules and, 748, 757–758, 769
disclosure requirements and, 748, 757–758
dissonance reduction and, 765
early rationalist critiques and, 750–752
ecosystem complexity and, 770
endogeneity and, 749, 767, 774
endowment effect and, 754, 764, 766–767
energy efficiency and, 160–162, 758, 762
foreground bias and, 771
framing and, 760, 769
gasoline taxes and, 766
greenhouse gas regulation and, 321, 733, 757, 766
group polarization and, 753, 755, 757
individual versus statistical victims and, 772
information salience and, 753–754, 757
libertarian paternalism and, 756–758, 769–771
loss aversion and, 754, 764, 766–767
market pricing and, 772–774
monetary value of a statistical life (VSL) and, 752
moral panics and, 753
natural disasters’ impact and, 759–761, 766
nudges and, 749, 756–758
precautionary regulation and, 749–750, 753–755, 759–761, 767
probability neglect and, 753
prospect theory and, 760
rational choice theory and, 759, 767
regulatory impact analysis and, 750–751
risk perception and, 748–749, 753–755, 759–760, 762
risk regulation and, 754, 762–763, 774
shoves and, 749, 764–767
social norms and, 757–758, 775
status quo bias and, 753–754, 757, 765–767
stigma effect and, 763–764
Superfund sites and, 764
willingness to pay (WTP) evaluations and, 769
Environmental Protection Agency (EPA)
“cancer premium” calculation and, 762–763
Clean Air Act and, 349
coal ash regulation and, 763–764
fuel efficiency disclosure requirements and, 730, 732, 757
greenhouse gas reporting rule and, 733
equality heuristics, 80–81
equal weighting heuristic, 13
equilibrium analysis, 504, 769
European Commission, 720, 751
European Union, 272, 544, 619, 720
euthanasia, 71, 102
evidence law
adversarial process’ impact on bias and, 705–706
attribution errors and, 711, 713
availability heuristic and, 704–706, 713
character evidence and, 711–714
circumstantial evidence and, 707
expert testimony and, 707–708
eyewitness testimony and, 707
hearsay and, 704–705
hindsight bias and, 706, 708, 710–711
omission bias and, 709
overcorrection bias and, 704
proposals to change, 706
rational choice theory and, 703, 709
representativeness heuristic and, 705–707, 713
sex crimes and, 705, 711–713
simulation heuristic and, 707
standards of proof and, 708–709
statistical data and, 708
subsequent remedial measures and, 710–711
evolutionary biology, 117
evolutionary psychology, 9, 287
Ewing v. California, 653
Executive Order 12291 (Reagan), 750
expectation damages, 454, 458–461
expected utility theory
defining elements of, 7
deviations from, 9
(p. 814) insurance law and, 492–494, 498–500, 511, 513
loss aversion, 268–270, 273, 288–289
probability and statistics in, 8
extended warranties, 505–509
Family and Medical Leave Act, 252
fast and frugal heuristics, 12, 172–173
Federal Cigarette Labeling and Advertising Act, 248
Federal Communications Commission (FCC), 481, 483
Federal Public Health Cigarette Smoking Act of 1969, 248
Federal Reserve Board, 479
Federal Rule of Evidence 403, 710
Federal Rule of Evidence 413, 711
Federal Trade Commission (FTC), 478–479, 485, 736
financial literacy education, 103–107
firms
corporate boards and governance in, 549–550
institutions within, 548–550
learning by, 545–546
managers in, 547–548
organizational repairs in, 548–549
overoptimism bias and, 525, 548, 553
rational choice theory and, 546–550
first-order thoughts, 118
fixed pie bias, 632
Flood Control Act of 1936, 750
Food and Drug Administration (FDA), 731
Food Marketing Institute, 741
framing effects
basic properties of, 96–97, 148–149
debiasing and, 154–155
environmental law and, 760, 769
litigation and settlement and, 628
nudges and, 722
plea bargaining and, 658
taxation and, 599–600, 609, 614
tort law and, 420–421
fuel efficiency, 758
fuzzy-trace theory, 173–174
Geneva Papers on Risk and Insurance (journal), 491
Gerhardt v. Continental Insurance Cos., 456
gift-exchange game, 33–34
The Gift Relationship: From Human Blood to Social Policy (Titmus), 587
gist memories, 173–174
Goldberg v. Kelly, 283
Golden Rule, 421
Good Samaritan laws, 245, 258, 586
Graham v. John Deere Co., 358
Green Behavior, 720
greenhouse gas regulation, 321, 733, 757, 766
Griffith v. Brymer, 453
Griggs v. Duke Power Co., 229
Grocery Manufacturers Association, 741
gun control, 243–245, 252–253
Hadley v. Baxendale, 370, 458
Haifa Municipality (case), 431
happiness research, 101–102, 590–594
harm principle, 255
heuristics. See also specific heuristics
Bayesian probability theory and, 3–4
children’s learning and, 15–16
debiasing and, 19–20
early history of research on, 10–14
isolation effects and, 17–18, 83
overgeneralization within, 16–17
representativeness and, 3, 11
two-system theory and, 18–19
undergeneralization within, 16
hindsight bias
basic properties of, 148
bifurcation of legal proceedings as a means of dealing with, 366–367
British-Gurka war experiment and, 355
burden of proof and, 367
consider-the-opposite strategy and, 364–365
contracting out of, 369–370
corporate law and, 357, 527
countervailing factors and, 362–363
criminal law and, 358–359
debiasing and, 364–366
dividend payments and, 369
(p. 815) experiments demonstrating, 355, 358, 367
impact on production of evidence, 356–360
judges and, 359–360, 370
in judicial decision-making, 356–360, 673
jurors and, 356, 360, 365–367, 370
motivated reasoning and, 363
normative implications of, 354, 360–363
overoptimism bias and, 362–363
patent law and, 357–358
substantive legal rule changes as means of dealing with, 367–369
tort law and, 356–357, 410–412, 414, 419
Holiday Inns of America Inc. v. Knight, 451
homo economicus. See also rational choice theory
criticism of the model of, 30, 33–34, 43, 46, 53, 197, 199–200, 202–204, 208–210, 752–753
Global Financial Crisis (2008-2009) and, 518
history of the idea of, 31, 195–196
as sociopathic actor, 196–197
utility maximization and, 31–33, 195–197, 206
homo reciprocans, 30–33, 35, 46
human rights, 282–284
Hurricane Katrina (2005), 765
Hurricane Sandy (2012), 766
hyperbolic discounting, 10, 104, 116, 577
indirectness bias, 73–74
In re Cellphone Termination Fee Cases, 477
insurance law
adverse selection problem and, 492, 494–496, 502, 504, 512
Affordable Care Act and, 491–492, 495, 513
availability heuristic and, 501
behavioral economics and, 497–504
complexity aversion and, 501
consumer heterogeneity and, 471, 478, 503–504
deductibles and, 494–495, 498, 504–505, 509–512
demand-side anomalies and, 498–502
disclosure and, 496, 503, 508–509
economic basis of, 493–494, 497
employer-provided health insurance and, 512
excessive discounting and, 499
expected utility theory and, 492–494, 498–500, 511, 513
extended warranties and, 505–509
government regulation and, 493–497, 502, 508–509, 511–513
hyperbolic discounting and, 501
imperfect rationality and, 502–504
information problems facing consumers, 496–497
information problems facing insurers and, 494–496
information processing problems and, 501
loss aversion and, 500, 502–503, 505–506, 509–510
low-deductible home owners’ insurance and, 509–511
market equilibria and, 504–505, 507–513
moral hazard and, 494–496, 498, 502
overoptimism bias and, 499, 504
regret aversion and, 500, 502–503, 505–506, 509, 512
risk aversion and, 494–495, 498–499, 505, 509–511
risk classification and, 495
threshold effects and, 500–501
tort law and, 410, 417–418, 425
underwriting and, 495
International Association for the Study of Insurance Economics, 491
International Monetary Fund, 619
Iowa Civil Rights Act, 242–243
Japan, 43
Jekyll-Hyde syndrome, 201–202
Joy v. North, 520
judicial decision-making
anchoring effects and, 678–680
anti-inference bias and, 682
attitudes toward probabilistic evidence and, 681–683
attitudinal models of, 664–665
base-rate neglect and, 682–683
Bayesian probability theory and, 3
(p. 816) compromise effect and, 667, 670
contrast effect and, 667, 670
damage awards and, 675–677, 679–681
descriptive models of, 4–5, 9–10
ethnic bias and, 132
group decision-making dynamics and, 677, 688–690
group polarization and, 677, 689
hindsight bias and, 356–360, 673
implicit association tests (IATs) and, 684–685
inadmissible evidence and, 671–673
individual decision-making dynamics and, 677
judges versus laypersons and, 690–692
juries and, 666, 669, 677–681, 689, 692
law and economics research on, 666
mathematical models and, 9–10
moral heuristics and, 666
neo-institutionalist model of, 665
normative models of, 5–6, 8
numerical decisions and, 675–676
omission bias and, 673–675
“outrage model” and, 678
prejudice and, 683–686
prejudicial evidence and, 669
prescriptive models of, 6
priming and, 683–686
probable cause rulings and, 691
rational choice theory and, 664–666, 669
rules versus standards in, 686–688
stare decisis doctrine and, 674–675
status quo bias and, 674
story model of fact-finding and coherence-based reasoning in, 667–669
sunk costs and, 675
Kelo v. New London, 383
Kingston Fossil Plant (Tennessee), 763
Kodak, 551–552
Krell v. Henry, 454–455
lawyers’ fees, 275–278, 406
Leegin case, 558–559
“Let’s Move” initiative, 741
libertarian paternalism. See also paternalism
decision architecture and, 23
environmental law and, 756–758, 769–771
externally imposed goals and, 183n12
goal-based decision-making and 176
nudges and, 726–727
organ donation and, 100
litigation and settlement. See also plea bargaining
adversarial posture of, 631–632
anchoring effects and, 627, 636
apologies and, 629, 631
availability heuristic and, 627
biased assimilation and, 633
compromise effect and, 634
confirmation bias and, 612–613
contrast effect and, 634
cost considerations and, 624–625, 629–630
fixed pie bias and, 632
framing effects and, 628
imperfect information and, 625
inaction inertia and, 630
information gathering and, 632–633
lawyers as agents in, 634–636
lawyers’ fee arrangements and, 634–635
litigant views of procedural justice and, 630–631, 636
loss aversion, 278–279, 628, 634–635
naïve realism and, 633
“negotiator’s dilemma” and, 631
nonmonetary influences and, 629–631
option devaluation and, 634
overoptimism bias and, 336, 341, 626
predictions and, 625–626
prospect theory and, 628
punishment magnitude gaps and, 632
rational choice theory and, 623–624
reactive devaluation and, 632, 636
regret aversion and, 629–630
risk tolerance and, 627–628
self-serving biases and, 626, 633, 636
settlement options and, 633–634
“shadow of the trial” and, 627
standard economic models of, 624–625
strategic bargaining decisions and, 625, 631
subadditivity and, 626
sunk costs and, 629
zone of possible agreement and, 625
(p. 817) loss aversion
affirmative action and, 284
asylum law and, 284
breach of contract and, 284
burden of proof rules, 280–281
civil and political rights (CPRs) and, 282–283
cognitive psychology and, 286–287
consumer behavior and, 274–275
contract law and, 275, 446–447, 454–455
default rules and, 279–280
deontological morality and, 283, 286–287
emotional aspects of, 271–272
endowment effect and, 149, 268, 270, 272–273, 275, 291, 312–317
environmental law and, 754, 764, 766–767
equity premium puzzle and, 271
evolutionary theory of common law and, 284–285
expected utility theory, 268–270, 273, 288–289
financial incentives for teachers and, 271
human rights and, 282–284
human welfare theories and, 288–289
information problems and, 277
lawmakers, among, 291
lawyers’ contingency fees and, 275–278
legal norms’ impact on reference points and, 269, 290–291
legal policymaking and, 289–290
litigation and settlement and, 278–279, 628, 634–635
normative implications, 288–291
nudges and, 723
omission bias and, 272, 275, 281, 292
plea bargaining and, 647–648
prediction of human behavior and, 269–270
prospect theory and, 268, 270–271, 273
regret and, 272, 274, 278–279
retirement savings and, 272
social and economic rights (SERs) and, 283–284
status quo bias, 268, 270–273, 275, 279, 289, 291–292
sunk costs and, 273, 275
taxation and, 600, 618
tort law and, 282
unjust enrichment and, 282
mandatory minimum sentences, 653, 657, 660–661
markets
aggregation mechanisms and, 543–544
consumer behavior and, 542–543
firms’ learning behavior and, 545–546
producer behavior and, 543–546
selection mechanisms and, 544–545
Medicaid, 734
Medicare, 103–104, 619, 734, 739
moral attitudes. See also behavioral ethics; moral judgment
abortion and, 246
blood donation and, 250
breastfeeding and, 242
capital punishment and, 255
cigarette smoking and, 242, 248–252
date rape and, 256
dissensus and, 244, 246
energy use and, 252
gun control and, 243–245, 252–253
impact of source of legal regulations on, 253–255
legal regulation and, 244, 247–260
level of citizen involvement’s impact on, 256
manner of legal regulation’s impact on, 257–258
mechanisms of influence and, 247–258
nudges and, 248–250
perceived legitimacy of legal system and, 245–247
public information campaigns and, 241, 248, 252, 257
punishment’s impact on, 245–246
recycling and, 248–252
regarding harms to third parties, 249, 255
school desegregation and, 254–255
self-interest and, 257, 259–260
sexual harassment and, 242–243
social meaning changes and, 250–253
U.S. Supreme Court’s impact on, 258
moral hazard, 494–496, 498, 502
(p. 818) moral judgment. See also behavioral ethics; moral attitudes
agent relativity and, 74
authority independence and, 62
belief and, 85–86
biases in helping others and, 78–80
blank slate model and, 61
charity heuristics and, 79–80
children’s cognitive development and, 61–63
deontology and, 75–78
distribution of goods and bads, 80–82
emotion’s role in, 76–78
equality heuristics and, 80–81
equity theory and, 63–64
genetics and, 62
history of research on, 61–63
identified victim cases and, 79
indirectness bias and, 73–74
intuition and, 64–65, 68–69
just world hypothesis and, 63
moralistic goals and, 70–71
morality of citizenship and, 82–84
naïve theories of citizenship and, 84
naturalism bias and, 75
normative theory of, 65–68
omission bias and, 68, 71–74
parochialism and nationalism in, 83–84
physical proximity and, 73
protected values and, 69–71, 73
psychological basis of biases in, 75–78
psychophysical numbing and, 79
trolley problem examples and, 71–73, 75
two-systems theory and, 75–76
utilitarianism and, 66–69, 71–72, 78
multiattribute utility, 7
MyData initiative (United Kingdom), 481
myopia
consumer transactions and, 474, 482
retirement savings and, 103–105
taxation and, 603, 606–607, 613
my-side bias, 20–21, 70
naive theories, 22
National Federation of Independent Businesses v. Sebelius, 254
National Highway Transportation Safety Administration (NHTSA), 758
National Organ Transplantation Act of 1984, 99
National School Lunch Act, 734
naturalism bias, 75
negative option marketing, 736
Nelson v. James H. Knight DDS, 242–243
normality bias, 184
normative model of decision-making, 6–8
normative theory of decision-making, 3–6
Nuclear Free Zones, 253–254
nudges
active choice requirements and, 737–738
behavioral ethics and, 227–228
behavioral market failures and, 726
choice architecture and, 719
compliance without enforcement and, 723–724
default rules and, 721, 733–739
disclosure and, 722, 727–733
endowment effect and, 723
energy efficiency and, 721–722, 726–728, 736, 740, 742
environmental law and, 749, 756–758
food consumption and, 723, 725, 729–730, 735, 741
framing effects and, 722
hard shoves compared to, 256, 749
health care coverage and, 728–729, 734
informational cascades and, 723, 740
libertarian paternalism and, 726–727
loss aversion and, 723
market forces and, 726–727
as means to combat choice overload, 738
as means to combat obesity, 735
as means to combat procrastination and inertia, 721–722, 735–736
moral attitudes and, 248–250
nutritional disclosure and, 728
optimism bias and, 724
probability assessment and, 724
retirement savings accounts and, 733–734
risk tolerance and, 724
salience of information and, 722–723, 739–740
(p. 819) simplification of choices and, 719, 721, 726–727, 742
social norms and, 723, 740–741
Occupational Safety and Health Administration (OSHA), 733
Office of Fair Trading, 508–509
Office of Information and Regulatory Affairs, 483, 719, 757
omission bias. See also status quo bias
agent relativity and, 74
evidence law and, 709
judicial decision-making and, 673–675
loss aversion and, 272, 275, 281, 292
moral judgment and, 68, 71–74
naturalism bias and, 75
perceived causality and, 72
physical proximity and, 73
property law and, 378
protected values and, 71, 73
optimal contracting theory, 208–209
Organization of Economic Cooperation and Development and Cooperation (OECD), 720, 751
organ transplants, 98–100, 272
outcome bias, 355–356, 366, 410–412
overoptimism bias
antitrust law and, 553, 557
attribution bias and, 337–339, 524, 711, 713, 769–770
automobile driving and, 147–148, 152, 335, 337, 339
below-average effect and, 340
benefits of, 340–341
better-than-average effect and, 147
blind spot bias and, 147–148, 152
cigarette smoking and, 162–163, 341–342, 724
consider-the-opposite strategies and, 341
consumer behavior and, 336, 338, 340–341, 468, 474, 482
contract law and, 445–446, 449, 452, 455
at corporate law firms, 525, 548, 553
criminal law and, 585–586
empirical findings regarding, 336–340
harm minimization and, 337
health-related risk and, 341–342
hindsight bias and, 362–363
information levels and, 338
insurance law and, 499, 504
legal settlements and, 336, 341, 626
marriage and, 342–343
nudges and, 724
plea bargaining and, 646–647
representativeness bias and, 148, 163
resiliency of, 339
tort law and, 338, 413–414, 418–419
warnings and prohibitions against, 249–250, 320, 721, 740
paternalism
hard paternalism and, 478
libertarian paternalism and, 23, 100, 176, 183n12, 726, 756–758, 769–771
soft paternalism and, 478
Patient Protection and Affordable Care Act. See Affordable Care Act
Pension Protection Act of 2006, 734
Petition of Kinsman Transit Co., 411
plea bargaining. See also litigation and settlement
ambiguity aversion and, 345–346
anchoring effects and, 657
bounded rationality and, 645–646
bounded willpower and, 648–649, 660
criminal versus civil litigation and, 654–655
discovery regimes and, 646, 654–657
endowment effect and, 648, 659
exculpatory evidence access and, 656
fairness bias and, 649–650
framing effects and, 658
information deficits and, 645–646, 654–655
in international context, 644
lawyers’ roles in, 659–660
loss aversion and, 647–648
mandatory minimum sentences and, 653, 657, 660–661
minimization of probability-of-conviction uncertainty and, 654–656
minimizing sentencing ambiguity and, 657–658
(p. 820) opportunity costs and, 635, 645
overdiscounting and, 648–649
overoptimism bias and, 646–647
plea discounts versus trial penalties and, 651–654
pretrial detention’s impact on, 658
prevalence of, 643
process costs’ impact on, 658–659
prosecutors’ preferences and, 650
prospect theory and, 647, 650
rational choice theory and, 643, 647–649, 657, 661
reverse proffers and, 656
risk aversion and, 646–648, 650, 658
self-serving bias and, 643, 646–647, 654–655
sentencing differentials and, 644, 652–654
three-strikes laws and, 653
Polaroid, 526
prescriptive theory of decision-making, 4–6
prisoner’s dilemma, 29, 39–40, 198
property law
adverse possession and, 379, 387–389
bankruptcy proceedings and, 382
commercial property and, 383–384
crowding-out effect and, 378
development rights and, 384–386
eminent domain and, 378, 381
endowment effect and, 384–385
existing versus prospective use and, 384, 387
fungible property and, 380–387
home-protective laws and, 383
in-kind versus monetary remedies and, 378, 386, 394, 397–398
nonfungible property and, 382, 385, 387, 389
omission bias and, 378
ownership versus possession and, 387–389
personhood theory and, 382, 399
physical versus nonphysical injuries to land and, 384–385
“property as bundle of sticks” definition and, 380–381
“property as thing” definition, 380–381
property rules versus liability rules and, 390–395
redistribution and, 395–397
regret avoidance bias and, 378
self-development and, 386, 394
tenancy and, 379, 387–388, 395–397
transactions costs and, 390–391
zoning regulations and, 38, 384–385
prosocial behavior
altruism and, 199–200
contract law and, 206–207
corporate and securities law and, 207–209
“crowding out phenomenon” and, 204, 209
dictator game’s measurement of, 198–200
environmental preservation and, 203–204
fiduciary duties and, 208
Jekyll-Hyde syndrome and, 201–202
legal implications of, 202–209
negligence and, 204–206
optimal contracting and, 208–209
pervasiveness of, 198
social cues and, 201
social dilemma game’s measurement of, 198, 200–201
social norms and, 203
spite and, 199–200
as supplement or replacement to regulation, 203–204
tort liability and, 205
ultimatum game’s measurement of, 198–200
prospect theory
criminal law and, 579–581
environmental law and, 760
loss aversion and, 268, 270–271, 273
plea bargaining and, 647, 650
risky choices and, 176
tort law and, 413
protected values, 69–71, 73
Psychology, Public Policy & Law (journal), 126
public goods games
altruistic punishment and, 35, 47
antisocial punishment and, 51–54
basic features of, 34
collective action problems and, 45
conditional cooperation and, 42–45, 54
cooperation and, 30, 34
efficiency seeking and, 35–36
external punishment and, 39
(p. 821) free riding and, 34–40, 42, 44–51, 54
guilt aversion and, 39, 43, 54
imperfect observation and errors in, 49
indirect reciprocity and, 50
inequality aversion and, 35–37, 43
institutionalized punishment and, 49–50
intentions’ impact in, 35–37
internal punishment and, 39
linear version of, 34
moral judgments in, 38–40
partners condition and, 46
perfect stranger condition and, 47
prisoner’s dilemma and, 39–40
punishment and, 35–37, 39–40, 45–54
reciprocity and, 30, 33–37, 40–43, 46, 48, 50–51
reputation and, 50–51
rewards and, 50
selective incentives and, 45
self-interest and, 30
stranger condition and, 46–47
rational choice theory. See also homo economicus
antitrust law and, 540–541
behavioral law and economics’ challenges to, 93, 95–97, 101–102, 111–114, 116, 143, 164, 167–172, 175, xi
contract law and, 439, 441–446
corporate and securities law and, 518–521, 523–524, 526–527, 534
corporate firms and, 546–550
criminal law and, 571–574, 589
environmental law and, 759, 767
judicial decision-making and, 664–666, 669
litigation and settlement and, 623–624
plea bargaining and, 643, 647–649, 657, 661
tautological problems with, 117
taxation and, 599–601, 604–605
utility maximization and, 68, 143–145, 167–169, 175, 195–198, 200–201, 209, 268, 278, 288, 420n11, 439, 441, 460, 497, 518, 523, 623–624, 649, 665, xi
weakness of will and, 116
welfare economics and, 610–611, 614, 767, 773, xi
recency effect, 156
reciprocity
efficiency seeking and, 36–37
heuristic of, 14
indirect reciprocity and, 50
inequality aversion and, 35–37, 43
intentions and, 36–37
norms of, 724
strong negative forms of, 30, 33–36, 46, 48, 51
strong positive forms of, 30, 33–34, 40–42, 51
recycling, 248–252
resale price maintenance (RPM), 557–559
Resource Conservation and Recovery Act (RCRA), 763
Restatement First of Contracts, 441
Restatement of Torts, 368
Restatement Second of Contracts, 441, 450, 460
retirement savings
default rules and, 733–734
loss aversion and, 272
myopia and, 103–105
nudges and, 733–734
Sarbanes-Oxley Act, 151n19, 157, 533
Save More Tomorrow program, 102
second-order thoughts, 118
Securities and Exchange Commission, 533
self-serving bias. See also overoptimism bias
litigation and settlement and, 626, 633, 636
plea bargaining and, 643, 646–647, 654–655
set point of individual happiness, 101–102
sexual harassment, 242–243
Sherman Act, 540, 551
SMarT savings program, 179
smoking. See cigarette smoking
Smoking Prevention and Tobacco Control Act, 731
social dilemma game, 198, 200–201
social norms
behavioral ethics and, 224–225
distracted driving and, 731, 741
environmental law and, 757–758, 775
nudges and, 723, 740–741
prosocial behavior and, 203
seat belts and, 723–724
(p. 822) social order. See also public goods games
behavior of other people and, 40–45
internalized norms and, 37–40, 53
personal ethics and, 30–31
prisoner’s dilemma and, 29
punishment and, 31, 45–51
rule of law and, 28–29, 51–53
self-enforcement and, 29–30
self-interest and, 28–29, 54
Social Security, 103–104, 616, 619
status quo bias. See also omission bias
environmental law and, 753–754, 757, 765–767
judicial decision-making and, 674
loss aversion, 268, 270–273, 275, 279, 289, 291–292
taxation and, 600, 606, 615, 618
sunk-cost effect, 15, 273, 275, 629, 675
Superfund sites, 348, 764
Swann v. Charlotte-Mecklenburg Board of Education, 254
System 1 thinking
behavioral ethics and, 214–215, 218–219, 225–227, 231
defining features of, 18–19, 171
moral judgment and, 75–77
System 2 thinking
behavioral ethics and, 215–216, 219–220, 227, 230–231
defining features of, 18, 171
moral judgment and, 75–77
taxation
advanced payment and, 581
allocative function of, 610–611
ambiguity aversion and, 346
behavioral modification and, 605–607
child tax credits and, 609
communication strategies and, 614
compliance matters and, 603–605
differential taxation and, 83
disaggregation bias and, 609–610, 614
distributive function of, 610–611
endowment effect and, 600–601, 618
fiscal balance and, 617–619
fiscal cliff negotiations (2012) and, 615–617
flat taxes and, 83, 608–609
form aversion and, 610
framing effects and, 599–600, 609, 614
government enforcement and, 604
loss aversion and, 600, 618
market salience of taxes and, 602–603, 612
metric effect and, 608
myopia and, 603, 606–607, 613
normative analysis of, 610–615
perceptions of fairness and, 604
political salience of taxes and, 602–603, 611
privatization effect and, 614
progressivity and, 608–610, 614–615
rational choice theory and, 599–601, 604–605
retirement savings plans and, 606–607
sin taxes and, 605
status quo bias and, 600, 606, 615, 618
subadditivity and, 609
substitution effect and, 612–613
tax evasion and, 604
tax system design and, 607–617
A Theory of Justice (Rawls), 65
thick rationality, 146–147
Thinking, Fast and Slow (Kahneman), 18, 215
thin rationality, 146–147, 521
three-strikes laws, 653
TimeWarner, 526
Tire Fuel Efficiency Consumer Information Program, 758
tort law
versus administrative regulation, 417–420
affective forecasting and, 107–108
aggregate social welfare goal of, 407–408
aggregative cost-benefit test and, 430
alternative-care settings and, 408–409, 418
attorneys’ contingency fees and, 406
availability heuristic and, 414, 418–419
bellwether trials and, 432
bilateral-care settings and, 408–409, 413, 415
comparative negligence rules and, 409, 416, 431–432
contributory negligence rules and, 409–410, 413, 415–416
corrective justice norm and, 183
deterrence and, 81, 409, 413–415, 418–420, 423–424, 432
(p. 823) diffuse liability and, 428
employees versus independent contractors and, 426–428
environmental disasters and, 431
fixed accident losses and, 413
framing effects and, 420–421
Golden Rule and, 421
Hand Formula and, 406, 411
hedonic adaptation and, 421–423
heterogeneity of victims and, 428–432
hindsight bias and, 356–357, 410–412, 414, 419
indirectness effect and, 427
insurance and, 410, 417–418, 425
jurors and, 412, 420–421, 423–425
law and economics research and, 405, 410
versus law of unjust enrichment, 269, 282
legislated damages caps and, 205, 680
market share liability and, 432
negligence and, 406–418, 424, 426, 430–431
neoclassical economic model for accidents and, 407–408, 415–417
no liability regimes and, 409, 415–416
optimal enforcement and, 424
outcome bias and, 410–412
outgroup homogeneity bias and, 428–432
overoptimism bias and, 338, 413–414, 418–419
pain and suffering damages and, 420
versus Pigovian taxes, 417
probabilistic nature of, 405–406, 409–414, 417–420
probability insensitivity bias and, 413
probability of successful lawsuit and, 424
prospect theory and, 413
punitive damages and, 81, 423–425
pure negligence rules and, 409, 415
remedies and, 406
respondent superior doctrine and, 426
risk-based regimes versus harm-based regimes, 419–420
risk of insolvency’s impact on, 415–419
safe harbors and, 368
split-award statutes and, 138
standard of care with multiple victims and, 430–432
strict liability regimes and, 361, 407, 409–416, 418
underestimation of group variability and, 428–429
underresearched areas in, 425–432
variable accident losses and, 413
vicarious liability and, 425–426
Treasury Department, 731, 734
trolley problem, 71–73, 75
trust game, 33–34
Truth-in-Lending Act, 485
ultimatum game
basic rules in, 32
departure from homo economicus assumptions in, 33
equity theory and, 64
fairness bias and, 649
heterogeneity of outcomes in, 178
inequality aversion and, 36
negative reciprocity and, 34
prosocial behavior and, 198–200
transfers of entitlements and, 391–392
Uniform Anatomical Gift Act, 100
unilateral change clause, 473–474
United Kingdom, 100, 481, 483, 501, 505, 508, 720, 737
United States v. Bagley, 656
United States v. Carroll Towing Co., 328, 406n2
United States v. Conroy, 656
United States v. Rose Marks et al., 493n1
unjust enrichment, 282
utilitarianism. See also consequentialism
altruism and, 84
conflicts with intuition and, 68–69
deontology and, 75
expected utility theory and, 68
motivation and, 80n7
as a normative theory of moral judgment, 66–69, 71–72, 78
people as units of analysis in, 7
person’s identity as irrelevant in, 8, 83
utility maximization. See under rational choice theory
verbatim memories, 173–174
victim impact statements, 102
Vietnam War, 259
(p. 824) Walmart, 486, 741
The Walt Disney Co. Derivative Litigation 2006, 368, 529
welfare economics, 68, 610–611, 614, 767, 773, xi
Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 541
wicked environments, 175
Williams v. Walker-Thomas Furniture Co., 455–456
willingness to accept (WTA). See under endowment effect
willingness to pay (WTP). See under endowment effect
World Trade Organization (WTO), 751