Choice Architectures

Abstract

This brief symposium contribution takes stock of the 'behavioralist turn' in classical decision theory, finding in its systematic endogenizing of preferences a close cousin to efforts to situate the 'unsituated self' of classical liberal justice theory. It finds that this turn has not only enriched theory, but has also assisted policy by sidestepping once deep divides between self-styled 'liberals' and 'welfarists' - much as advertised by distinguished contributors to the field including Sunstein and Thaler.

The piece concludes by suggesting further, more 'macro'-oriented adjustments to choice architectures that likewise can 'nudge' welfare-enhancing choices without outright coercing them. In particular, it describes government 'market actor' roles that I have proposed elsewhere to solve a great variety of what I call the recursive collective action problems that plague financial markets and macro-economies. Because these problems are endemic to decentralized markets, harm literally everyone, and cannot be solved by anyone acting individually, modulating individual incentives through collective market action need not count as 'coercive' at all.

Keywords: Behavioralism, Behavioral Economics, Behavioral Law and Economics, Bounded Rationality, Choice, Choice Architecture, Choice Theory, Economics, Economic Analysis of Law, Endogeneity, Justice Theory, Law and Economics, Legal Theory, Liberal Justice Theory, Liberalism, Welfare Economics, Welfarism