Behavioral Approach to Law

Alexandra Milykh The Behavioral Approach to Law This graduate paper is aimed at studying the main features of the behavioral approach to law and their using in regulating civil law relations. The main objectives of the paper are: (a) to establish the advantages of the behavioral approach to law in relation to the rational choice theory; (b) to analyze the basic postulates of behaviorism and demonstrations of bounded rationality; (c) to demonstrate the benefits of using the behavioral approach on specific examples of legal relations; (d) to analyze the problem of legal paternalism. Based on this research the following conclusions were made: firstly, the behavioral approach to law is based on the presumption of bounded rationality, which is a kind of a doctrinal challenge to the rational choice theory that has developed within the neoclassical economy. Secondly, most people turn out to be subjected to cognitive distortions such as over-optimism, over-confidence, availability heuristic, framing effect, hindsight bias and several others. Moreover, the analysis of bounded rationality is extremely important for consumer law and the institution of the consumer contract, because behavioral approach gives us the most convincing justification for the existence of a “weak” party in b2c contracts. And, finally, the manifestation of paternalism in law is necessary to defend the “weak” party from the unfair conditions of contracts and to “nudge” people to better long-term decisions. Academic Supervisor: Artyom Karapetov, Doctor of Juridical Sciences, Professor of Faculty of Law, National Research University “The Higher School of Economics”