In this paper we critically review the literature on rational choice theory (RCT) and the critical approaches to it. We will present a concise description of the theory as defended by Gary Becker, Richard Posner and James Coleman (as well as others) at the University of Chicago from the...

We develop a behavioral theory of real options that relaxes the informational and behavioral assumptions underlying applications of financial options theory to real assets. To do so, we augment real option theory's focus on uncertain future asset values (prospective uncertainty) with feedback...

The paper suggests that casting the choice problem in terms of alternative time-consuming activities can foster the fruitful cross-fertilization between economics and psychology along the lines suggested by Scitovsky in the Joyless Economy. The first part emphasizes how mainstream, utility-based...

The paper suggests that casting the choice problem in terms of alternative time-consuming activities can foster the fruitful cross-fertilization between economics and psychology along the lines suggested by Scitovsky in the Joyless Economy. The first part emphasizes how mainstream, utility-based...

Why do lawyers in some jurisdictions continue to ‘automatically’ exclude the 1980 UN Convention on Contracts for the International Sale of Goods (CISG) in their choices of law for international sales contracts? Why do lawyers in other jurisdictions approach the decision very differently? Why...

An under-appreciated aspect of F.A. Hayek's mature views about rationality is the inter-relation of the “pure logic of choice” and rule-following behavior. Sometimes it is asserted that Hayek abandoned his earlier understanding of individual rationality and replaced it with a completely...

The endowment effect is the seemingly irrationally tendency to immediately value a possessed item more than the opportunity to acquire the identical item when one does not already possess it. The phenomenon has broad legal implications, as it suggests a drag on trade, occasioned by inconsistent...

In recent years the term behavioral economics has arisen in consequence of the growing effort of a significant set of economists to import psychological methods and findings into economics. This body of work issues strong challenges to the use economists have made of rationality in economics....

Behavioral economics is influencing regulatory initiatives in many nations, including the United States and the United Kingdom. The role of behavioral economics is likely to increase in the next generation, especially in light of the growing interest in low-cost, choice-preserving regulatory...

Some people believe that nudges undermine human agency, but with appropriate nudges, neither agency nor consumer freedom is at risk. On the contrary, nudges can promote both goals. In some contexts, they are indispensable. There is no opposition between education on the one hand and nudges on...