Financial consumer protection and behavioural insights: severing the bond between consumer bias, rational choice theory and behavioural law and economics

Activity: Talk or presentation typesOral presentation


A significant legal innovation in recent times is the shaping of consumer law by behavioral insights like consumer biases. Scholarship predominantly defines bias as a systematic deviation of actual consumer choice from rational choice theory. This implies a behavioral law and economics methodology. This article challenges the pervasive bond between bias, rational choice theory, behavioral law and economics, and behaviorally informed consumer law. First, I demonstrate that rational choice theory is not an appropriate normative theory of choice in conditions of uncertainty and computational intractability, which are common in the real consumer world. Second, I show that bias can be defined relative to alternative theories of choice like ecological rationality and autonomy, which can function as normative foundations for behaviorally informed consumer law. Third, I explore the relationship between consumer biases and consumer harm. This gives rise to the argument that the concept of bias should be avoided in consumer law when (i) specifying the regulatory context that may call for legal intervention and (ii) stipulating possible forms of state intervention like nudging and debiasing. I propose heuristics as an alternative to the term bias.
PeriodAug 2021
Event titleGlobal Forum for Financial Consumers
Event typeConference
LocationSeoul, Korea, Republic ofShow on map
Degree of RecognitionInternational