Private Law, Nudging and Behavioural Economic Analysis

Antonios Karampatzos is Associate Professor of Private Law at the Law School of National and Kapodistrian University of Athens.

• Preface About the author PART ABehavioral economic analysis of law, nudge theory, and freedom of choice 1 Behavioral economic analysis of law (or behavioural law and economics) and paternalistic interference I The emergence of behavioral economic analysis of law and its instrumental value in the field of law II Do all individuals act irrationally? III Are all behavioral biases bad? IV Undermining the learning effect or experience through state interference: a moral hazard issue 2 Sunstein and Thaler’s nudge theory, the steering of people’s behavior by means of default or opt-out rules, and the promotion of a ‘mild’ or ‘libertarian’ paternalism I Introductory remarks II The pervasiveness of loss aversion and the endowment effect III The case for ‘mild’ or ‘libertarian’ paternalism and the proposed paradigm shift IV Beyond default rules: informational nudges and cooling-off periods V Main objections to nudging through default rules and arguments in favor of it 1 The deficiencies of centralized regulation 2 Undermining human dignity and personal autonomy through manipulation a Main points of the objection b Rebuttal aa The particular nature and function of default rules and the benefit from their legislative use bb Personal autonomy in need of a rethink? c The separate issue of informational nudging and the specific dangers associated with it 3 Negative externalities VI Toward an acceptable application of the nudge theory mainly on the basis of the principle of proportionality VII Default rules or freedom of active choosing? VIII The recent trend toward personalizing private law 3 Beyond defaults, opt-out or opt-in systems: the recourse to the visible hand of the mandated-choice model PART BEU private law and possible scope of application of the mandated-choice model under a Behavioral Economic Analysis of Law (BEAL) approach 4 The withdrawal right pursuant to Directive 2011/83/EU and the application of the mandated-choice model I Directive 2011/83/EU on Consumer Rights II The withdrawal right 1 The withdrawal right justified by virtue of BEAL 2 The rationale behind the withdrawal right in distance contracts 3 A third way: the mandated-choice model as a means of reinforcing private autonomy and efficiently protecting consumers a The need to steer a middle course between mandatory and default rules b The mandated-choice solution c Insurance premium and the issue of cross-subsidizationd Insurance premium and the issue of opportunistic consumer behavior e Juxtaposition with a scheme of personalized mandatory rules f Concluding remarks: the middle course between mandatory and default rules, tertium datur 5 The clause ‘as is where is’ in a sales contract and the application of the mandated-choice model I Introductory remarks II The barrier of EU law on consumer protection III Applying the mandated-choice model 6 Strict product liability and mandated-choice model: why are they incompatible? I Framing the question II Arguments against the application of the mandated-choice model III The moral hazard issue VI Concluding remarks 7 Final remarks: the philosophical foundations of freedom of choice and personal autonomy and the specific affiliation of the mandated-choice model to them I From Kant’s and Mill’s perception of personal autonomy to legal paternalism II Mild paternalism and the visible hand of the mandated-choice model III "Be Homer’s works your study and delight": when mild paternalism meets Odysseus Bibliography Index