Mitchell, Gregory --- "The price of abstraction" [2018] ELECD 224; in Teitelbaum, C. Joshua; Zeiler, Kathryn (eds), "Research Handbook on Behavioral Law and Economics" (Edward Elgar Publishing, 2018) 459

Book Title: Research Handbook on Behavioral Law and Economics

Editor(s): Teitelbaum, C. Joshua; Zeiler, Kathryn

Publisher: Edward Elgar Publishing

ISBN: 9781849805674

Section: Chapter 15

Section Title: The price of abstraction

Author(s): Mitchell, Gregory

Number of pages: 17

Abstract/Description:

Behavioral law and economics’ effort to replace standard microeconomic assumptions with more realistic, yet still simple assumptions—without jettisoning a basic economic orientation toward behavior that emphasizes prices and utility maximization—has led to the acceptance of an oversimplified view of human judgment and decision-making. Supposedly descriptive claims found in Behavioral Law and Economics often ignore heterogeneity in results and interactions among variables, emphasize the existence of effects over the size of effects and their practical significance, avoid open questions about external validity, and embrace vague labels rather than delve into the multiple psychological processes and other non-psychological factors that may cause or account for behavior. The price of this abstraction is a lack of predictive and explanatory validity and an inability to provide reliable policy guidance.