L&E: Behavioural Law and Economics

Traditional L&E assumes individuals...

Key Terms

People aren’t always purely self-interested; they may care about fairness or others’ wellbeing at a cost to themselves

Individuals often struggle to follow through on long-term goals, especially when facing short-term temptations or pressures

Humans make decisions with limited cognitive resources, time, and information, often settling for ‘good enough’ rather than optimal choices

People tend to give stronger weight to immediate rewards over future ones, often leading to procrastination or impulsive decisions

People often stick with pre-set option when it comes to making choices, choosing familiarity over change even though it may not be in their best self-interest

A game in which one player proposes how to divide a sum of money, and the other can accept or reject it; rejections (even of small unfair offers) highlight people’s concern for fairness.

People judge the likelihood of events based on how easily examples come to mind, which can lead to biased thinking when vivid or recent events dominate memory

Aims to steer people's choices in a way that improves their well-being while preserving their freedom to choose. It relies on "nudges"