From rational choice to behavioural economics: Theoretical foundations, empirical findings and legal implications

Abstract

This article considers how individual decision making is explained in rational choice, on the one hand, and in behavioural economics, on the other hand, and analyses the corresponding implications for the maximization of individual and social utility. Special emphasis is placed on whether and how the law can and shall positively influence non-utility-maximizing behaviour resulting from cognitive heuristics and biases.