The Behaviorally-Enlightened Fiduciary: Addressing Moral Dilemmas Through a Decision-Theoretic Model of Moral Value Judgment

Abstract

A fiduciary has an ethical obligation to act in the best interests of her client. In this paper, I argue that this obligation demands that a fiduciary advise her client from a behaviorally-informed perspective. However, this obligation creates new moral dilemmas, complicating ex-ante determination and ex-post evaluation of the fulfillment of fiduciary duties. I argue that a prima facie duty to disclosure is only overridden when the potential upside of the non-disclosed option to the beneficiary is small, the potential downside of the non-disclosed option to the beneficiary is large, and the fiduciary is epistemically justified in her beliefs regarding the potential outcomes. I present a decision-theoretic model for evaluating these dilemmas, as well as practical guidance for fiduciaries facing these trade-offs.