Regulating Markets

Mark Kelman

in The Heuristics Debate

Published in print March 2011 | ISBN: 9780199755608
Published online May 2011 | e-ISBN: 9780199895236 | DOI:
Regulating Markets

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The chapter considers H&B and F&F attitudes towards market failure and information disclosure, highlighting first that policymakers influenced by the H&B school have worried about internal as well as external impediments to making self-regarding choices and the misevaluation of the performance of members of “outsider” groups. It further emphasizes the H&B commitment to programs best described as “libertarian paternalist” or “asymmetrically paternalist,” intended to interfere with a subject’s immediate “liberty” but not her autonomy and also meant to permit subjects who have atypical tastes to manifest those tastes in ways that mandates would not. Policymakers influenced by F&F theory have emphasized, to a much greater extent, that typical disclosure policies are misguided: while it is desirable to improve the form in which information is presented, increasing the amount of information that consumers receive is generally counterproductive because information might “crowd out” the search for a single best lexical cue. The chapter questions the viability of each approach, arguing that neither truly works absent a separate theory of what substantive choices are ideal.

Keywords: consumer protection; risk perception; psychology of discrimination; information disclosure; libertarian paternalism; asymmetrical paternalism; fast and frugal heuristics; consumer choice; biases; consumer heterogeneity; collective rationality; individual rationality

Chapter.  12542 words. 

Subjects: Jurisprudence and Philosophy of Law

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