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It is strongly recommended that you include your outline in the body of your essay by using the outline as section titles. The headings below are there to remind you how section and subsection titles are formatted. | | | -- By MichaelDuignan - 06 Apr 2010 | |
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< | Neoclassical economics has, over a half century, come to exert great influence over legal structures. As a positive system, it lends mathematical precision to legal thinking. As a normative system, it shapes vast areas of law dealing with transaction and choice. Some wonder if its legal influence, however, has reached a zenith. As new tools enable researchers to discover the human brain and its cognitive limitations, some economists now question the assumptions neoclassical economics made concerning human nature. If a social theory is ultimately valued by how well it explains the forces guiding human behavior, this essay considers how such questioning might affect normative principles anchored to the neoclassical model. | >
> | Neoclassical economics has, over a half century, come to exert great influence over legal structures. In positive terms, it lends mathematical precision to legal thinking. As a normative system, it shapes vast areas of law dealing with transaction and choice. Some wonder if its legal influence, however, has reached a zenith. As new tools enable researchers to demystify the human brain and its cognitive limitations, some economists now question the assumptions neoclassical economics made concerning human nature. If a social theory is ultimately valued by how well it explains the forces guiding human behavior, this essay considers how such questioning might affect normative principles anchored to the neoclassical model. | | | The Hand Formula | | | 
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< | The shift in students’ subscription choice undermines Becker’s assumption that people make decisions from “a stable set of preferences.” Ariely demonstrates that people’s preferences are not always fixed and absolute, but can be dynamic and relational to the environment in which choice is permitted to occur. According to Ariely, the way to get people to choose option A over option B is to add option A', a clearly less desirable alternative to option A, thereby increasing the relative attractiveness of option A. | >
> | The shift in students’ subscription choices undermines Becker’s assumption that people make decisions from “a stable set of preferences.” Ariely demonstrates that people’s preferences are not always fixed and absolute, but can be dynamic and relational to the environment in which choice is permitted to occur. According to Ariely, the way to get people to choose option A over option B is to add option A', a clearly less desirable alternative to option A, thereby increasing the relative attractiveness of option A. | | | Choice as a Double-Edged Sword | |
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< | Under rational choice theory, multiple consumption options increase the likelihood that a given consumer will be able to find a choice suitable to his or her fixed preferences. However, Ariely suggests that benefit may be illusory, because carefully designed choices may actually shape the preferences of the individual. Obviously, this idea bears great significance for generally accepted notions of personal autonomy inherent in constitutional law. Yet, for anyone who's ever entered a supermarket with one item in mind, and left carrying a something else altogether, the potentiality of relative preferences is not totally far fetched. | >
> | Under rational choice theory, multiple consumption options increase the likelihood that a given consumer will be able to find a choice suitable to his or her fixed preferences. However, Ariely suggests that benefit may be illusory, because carefully designed choices may actually shape the preferences of the individual. Obviously, this idea bears great significance for generally accepted notions of personal autonomy essential to constitutional law. Yet, for anyone who's ever entered a supermarket with one item in mind, and left carrying something else altogether, the potentiality of relative preferences is not totally far fetched. | | | | | | What if we are simply so overwhelmed by multiple choices that we are blinded to our true preferences? Or what if a range of choices sometimes animates dormant preferences that we could not see otherwise? Either way, the prospects are not good for neoclassical assumptions. Further, the discovery of relative preferences has begun to infiltrate the way new market regulations are proposed. And neoclassical adherents are successfully shouting down such heretical assertions by labeling them old news. | |
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< | General Implications for Normative Systems | >
> | General Implications for Normative Structures | | | | |
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< | As Thaler et al did not profess to have an answer to rational choice theory, the movement is limited to poking holes in the neoclassical model. Neoclassical economists will likely respond with the tested Whac-A-Mole approach: reinterpret rational choice theory in increasingly clever ways to explain away behavioral economists' findings as they arise. | >
> | As Thaler et al did not profess to have an answer to rational choice theory, the movement remains limited to poking holes in the neoclassical model. Neoclassical economists will likely respond with the tested Whac-A-Mole approach: reinterpret rational choice theory in increasingly clever ways to explain away behavioral economists' findings as they arise. | | | | |
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< | If continuity is an essential goal of a normative structure, then, ideally, this debate engenders productive results for the law and economic movement, by encouraging it to reconsider and revise its premises, thereby strengthening the structure and the legal principles that depend on it. However, Thurman Arnold in The Folklore of Capitalism posited, "[l]aws and morals and economics are always arrayed against new groups which are struggling to obtain a place in an institutional hierarchy of prestige." At 4. If one adopts this view, the escalating debate around rational choice theory might signal the rumblings of an intradisciplinary holy war through which a new set of economic principles emerges. As an aspiring lawyer, the latter scenario presents both an exciting and disconcerting prospect, in that neoclassical assumptions undergird great real estate beneath contract, criminal and property law. My plan is to stay tuned. | >
> | If continuity is an essential goal of a normative structure, then, ideally, this debate engenders productive results for the law and economics movement, by encouraging it to reconsider and revise its premises, thereby strengthening the structure and the legal principles that depend on it. However, Thurman Arnold in The Folklore of Capitalism posited, "[l]aws and morals and economics are always arrayed against new groups which are struggling to obtain a place in an institutional hierarchy of prestige." At 4. If one adopts this view, the escalating debate around rational choice theory might signal the rumblings of an intradisciplinary holy war through which a new set of economic principles emerges. As an aspiring lawyer, the latter scenario presents both an exciting and disconcerting prospect, in that neoclassical assumptions undergird great real estate beneath contract, criminal and property law. My plan is to stay tuned. | | |
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