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64 U. Chi. L. Rev. 1175 (1997)
Behavioral Analysis of Law

handle is hein.journals/uclr64 and id is 1181 raw text is: Behavioral Analysis of Law Cass R. Sunsteint The future of economic analysis of law lies in new and better understandings of decision and choice.' In the last two decades, social scientists have learned a great deal about how people actually make decisions.' Much of this work calls for qualifications of rational choice models.3 Those models are often wrong in the simple sense that they yield inac- curate predictions. Cognitive errors and motivational distortions may press behavior far from the anticipated directions; normative accounts of rational choice should not be confused with descrip- tive accounts.4 But it does not follow that people's behavior is un- predictable, systematically irrational, random, rule-free, or elu- sive to social scientists. On the contrary, the qualifications can be described, used, and sometimes even modeled. Those qualifica- tions, and the resulting understandings of decision and choice,5 t Karl N. Llewellyn Distinguished Service Professor, The University of Chicago, Law School and Department of Political Science. I am grateful to J.B. Heaton, Judith Avra- hami, Dan Kahan, Martha Nussbaum, Richard Pildes, Richard Posner, Eldar Shafir, and Richard Thaler for valuable comments, and especially to Thaler and Daniel Kahneman for helpful discussions of many relevant topics; none of the aforementioned people is respon- sible for mistakes and misconceptions. Some of the ideas developed here are discussed in more detail in Cass R. Sunstein, Daniel Kahneman, and David Schkade, Assessing Puni- tive Damages (forthcoming Yale L J); Christine Jolls, Cass R. Sunstein, and Richard Thaler, Behavioral Law and Economics (forthcoming). ' These understandings sometimes go under the name of behavioral research or be- havioral decision theory. 2 I draw here on Richard H. Thaler, Quasi Rational Economics (Sage 1991); John Conlisk, Why Bounded Rationality?, 34 J Econ Lit 669 (1996). There is of course much controversy in specifying what rational choice models re- quire. Some of the evidence I discuss shows how people react to the presence of decision costs, and it is far from irrational to take those costs into account. It may also be fully ra- tional to consider the effects of social norms on choice, since norm violations can count as costs. It is far less important to struggle over whether the evidence shows violations ofra- tionality than to be as clear as possible on how human beings actually behave; it is the latter issue that I am concerned with here. ' This is a prominent theme in the work of Amos Tversky, taking normative ac- counts to refer to expected utility theory; Tversky's emphasis here is on cognitive errors. See, for example, Amos Tversky, Rational Theory and Constructive Choice, in Kenneth J. Arrow, et al, eds, The Rational Foundations ofEconomic Behavior 185 (St. Martin's 1996). See, for example, Daniel Kahneman and Amos Tversky, Prospect Theory: An Analy- sis of Decision Under Risk, 47 Econometrica 263 (1979); Graham Loomes and Robert Sug- den, Regret Theory: An Alternative Theory of Rational Choice Under Certainty, 92 Econ J 805 (1982). 1175

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