Abstract
AbstractThis Article analyzes the value of behavioral economics for EU judicial decision-making. The first part introduces the foundations of behavioral economics by focusing on cognitive illusions, prospect theory, and the underlying distinction between different processes of thought. The second part examines the influence of selected biases and heuristics, namely the anchoring effect, availability bias, zero-risk bias, and hindsight bias on diverse legal issues in EU law including, among others, the scope of the fundamental freedoms, the proportionality test as well as the roles of the Advocate General and Reporting Judge. The Article outlines how behavioral economic findings can be taken into account to improve judicial decision-making. Accordingly, the adaptation of judicial training concerning cognitive illusions, the establishment of a de minimis rule regarding the scope of the fundamental freedoms, and the use of economic models when determining the impact of certain measures on fundamental freedoms is suggested. Finally, an “unbiased jury” concentrating exclusively on specific factual issues such as causal connections within the proportionality test is necessary, if the hindsight bias is to be avoided. While it is of great importance to take behavioral economic findings into account, judicial decision-making is unlikely to become flawless based on natural intelligence. Despite bearing fundamental risks, artificial intelligence may provide means to achieve greater fairness, consistency, and legal certainty in the future.
Highlights
Anchoring is a cognitive bias that describes the tendency of individuals to rely too heavily on the first piece of information offered—the “anchor”— when making decisions.84 Once an anchor is set, the consequent decisions are made by adjusting away from that anchor.85 But, people adjust insufficiently.86 Even more problematic seems that anchors that do not provide any useful information may still influence the judgment
The adaptation of judicial training concerning cognitive illusions, the establishment of a de minimis rule regarding the scope of the fundamental freedoms, and the use of economic models when determining the impact of certain measures on fundamental freedoms is suggested
While it is of great importance to take behavioral economic findings into account, judicial decision-making is unlikely to become flawless based on natural intelligence
Summary
The Foundations of Behavioral Economics The concept of the homo economicus assumes that human beings are self-interested and make rational decisions based on facts, evidence, and preferences. Human beings are often considered as “resourceful, evaluating and maximizing.” Studies conducted to evaluate the actual behavior of humans—especially when deciding under uncertainty—criticize this model. The Foundations of Behavioral Economics The concept of the homo economicus assumes that human beings are self-interested and make rational decisions based on facts, evidence, and preferences.. RISK & UNCERTAINTY 297, 297–323 (1992); Daniel Kahneman & Amos Tversky, The Framing of Decisions and the Psychology of Choice, 211 SCIENCE 453, 453–58 (1982); Chris Guthrie, Prospect Theory, Risk Preference and the Law, 97 NW. 1655 (2011) (stating that “the battle to separate the economic analysis of legal rules and institutions from the straightjacket of strict rational choice assumptions has been won”); THALER, supra note 31, at 269 (providing a view that is a bit more suspicious and does not go beyond “mission launched”). Instead of concentrating on decisions and preferences of the addressees of the judgment, systematic biases of the judges themselves are the point of focus
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