Volume 95 - No. 3 Minnesota Law Review

Regulation in the Behavioral Era

Administrative agencies have long proceeded on the assumption that individuals respond to regulations in ways that are consistent with traditional rational-actor theory, but that is beginning to change. Agencies are now relying on behavioral economics to develop regulations that account for responses that depart from common sense and common wisdom, reflecting predictable cognitive anomalies. Furthermore, political officials have now called for behavioral economics to play an explicit role in White House review of agency regulations. While this is a significant development for the regulatory process, our understanding of how behavioral insights should alter regulatory analysis is incomplete. To account for behavioral anomalies, regulators will need to draw on behavioral and social science findings beyond behavioral economics. In addition, they will need an analytic framework to ensure that regulatory decisions reflect a comprehensive examination of the numerous, seemingly haphazard behavioral insights from other disciplines. Although behavioral research has demonstrated the limits of rational action, it does not provide a framework for considering extra-rational action. Nor have legal scholars developed such a framework, despite excellent theoretical work in the area. In the Article, we take an initial step toward implementing such a protocol. We provide a framework to facilitate agency consideration of extra-rational action, and extend that framework to include a lesson from behavioral research that academics have noted but not adequately explored: that individuals are concerned with social outcomes (e.g., social status or inclusion) as well as monetary outcomes (e.g., wealth), and that they seek to maximize utility both in rational and extra-rational ways. After sketching our framework, we offer concrete applications in the energy-use context. Our framework does not resolve all issues that may arise in the behavioral era, but it provides a means to move forward.

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De Novo

  • Dan’s Flaw

    DAN’S [F]LAW: STATUTORY FAILURE TO ENFORCE ETHICAL BEHAVIOR IN CLINICAL DRUG TRIALS Noah Lewellen* I. INTRODUCTION Paul, a sophomore at the University of Minnesota, bursts into a lecture hall, loudly claims to see monsters sitting in the seats, and offers his services in slaying them. The police are called, and Paul is restrained and delivered […]

  • Case Comment: Bhogaita v. Altamonte

    EVERY DOG CAN HAVE HIS DAY IN COURT: THE USE OF ANIMALS AS DEMONSTRATIVE EXHIBITS Kyle R. Kroll, Volume 100, Online Managing Editor In Bhogaita v. Altamonte, the Eleventh Circuit recently decided whether to allow a dog in the courtroom as a demonstrative exhibit.[1] Although the case presented many serious issues regarding the Fair Housing […]

  • Revisiting Water Bankruptcy

    REVISITING WATER BANKRUPTCY IN CALIFORNIA’S FOURTH YEAR OF DROUGHT Olivia Moe, Volume 100, Managing Editor This spring, as “extreme” to “exceptional” drought stretched across most of California—indicating that a four-year streak of drought was not about to resolve itself[1]—Governor Jerry Brown issued an unprecedented order to reduce potable urban water usage by twenty-five percent.[2] In […]