The John M. Olin Center

Paper Abstract

495. Christine Jolls & Cass R. Sunstein, Debiasing Through Law, 09/2004; subsequently published in Journal of Legal Studies, Vol. 35, No. 1, January 2006, 199-241.

Abstract: Human beings are often boundedly rational. In the face of bounded rationality, the legal system might attempt either to “debias law,” by insulating legal outcomes from the effects of boundedly rational behavior, or instead to “debias through law,” by steering legal actors in more rational directions. Legal analysts have focused most heavily on insulating outcomes from the effects of bounded rationality. In fact, however, a large number of actual and imaginable legal strategies are efforts to engage in debiasing through law – to help people reduce or even eliminate boundedly rational behavior. In important contexts, these efforts promise to avoid the costs and inefficiencies associated with regulatory approaches that take bounded rationality as a given and respond by attempting to insulate outcomes from its effects. This Article offers both a general theory of debiasing through law and a description of how such debiasing does or could work to address central legal questions in a large number of domains, from employment law to consumer safety law to corporate law to property law. Discussion is devoted to the risks of overshooting and manipulation that are sometimes raised when government engages in debiasing through law.

495: PDF