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80 Chi.-Kent L. Rev. 1235 (2005)
Neuroeconomics and Rationality

handle is hein.journals/chknt80 and id is 1255 raw text is: NEUROECONOMICS AND RATIONALITY TERRENCE CHORVAT* & KEVIN MCCABE** INTRODUCTION A greater understanding of human thought processes can aid us in the study of law in at least two ways. First, it can help us to better predict the effect of a particular legal regime on behavior, which is of primary impor- tance in deciding on the proper structure of a legal regime. Second, it can also help us to understand what it means to improve the welfare of the members of society. Just as all human decision making involves making estimates concerning optimality, so it must be for the government and its decision making. Neuroscience can and should inform these decisions. In recent years, we have learned a great deal about human decision making. Not only has there been an enormous amount of behavioral re- search but there has also been a large and increasing amount of research on the neural mechanisms involved in human decision making. It is difficult to overstate the importance of this research to our understanding of human decision making. Milton Friedman once suggested that, as we formulate models, the truth of the assumptions does not matter if the model can pre- dict behavior reasonably correctly,1 but, as Herbert Simon pointed out, this would only be a good way of thinking if we do not have microscopes.2 Effectively, we do now have microscopes that we can use to examine the mechanisms of human decision making. I. HUMAN DECISION MAKING AND RATIONALITY One of the key problems for both economics and for the application of economics to legal scholarship is the extent and the nature of rationality exhibited by economic actors. This is one of the largest areas of disagree- ment between adherents of traditional law and economics and the propo- * Associate Professor of Law, George Mason University. Professor Chorvat would like to thank the Laurence Cranberg Foundation and the Law and Economics Center for its support. ** Professor of Economics and Law, George Mason University, Director, the Center for Law and Neuroeconomics. The authors would like to thank Elizabeth Chorvat for her helpful comments. 1. MILTON FRIEDMAN, ESSAYS IN POSITIVE ECONOMICS (1953). 2. Herbert A. Simon, Problems of Methodolog)-Discussion, 53 AM. ECON. REV. 229, 229-30 (1963).

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