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More on behavioral economics

The new Law and Economics Blog criticizes my post Behavioral Economic Analysis of Law:

An uninformed reader would be greatly mislead in reading Professor Bainbridge's broad based criticism of legal decision theory, backed by what is simply a critique of one of its applications. Moreover, he largely ignores the descriptive power of legal decision theory by mentioning only one of its potential normative implications. To be fair, the blogosphere does not lend itself to comprehensive critiques. Professor Bainbridge may have good reasons in support of his seemingly over-broad introductory criticism. That the blogosphere is so situated, though, only speaks to why we should be careful when engaging in such a critique.

As to the complaint that I did not provide a "comprehensive critique," it would have been nice if the blogger had acknowledged that I included the following at the end of my post:

You can read an even more extended version of my argument, with application to the longstanding debate over mandatory disclosure in securities regulation, in my article Mandatory Disclosure: A Behavioral Analysis, 68 University of Cincinnati Law Review 1023 (2000).

If we're going to "be careful when engaging in ... a critique," let's include all the relevant facts.

Anyway, as for the complaint that I mention "only one of its [i.e., behavioral economics'] potential normative implications," the policymaking normative implications of behavioral economics strike me, at least, as the key question. In my article, I provide an example of one scholar who used generic behavioral economics claims to justify a prohibition of investor waivers of their rights under the securities laws, without showing that the various cognitive errors cited actually affect investor behavior in the context at hand. Behavioral economics, of course, can be relevant to legal issues other than policymaking. It might, for example, help lawyers and academics get a better handle on negotiations. Nothing in my post denies that. But my post was intended principally to suggest a limitation on the use of behavioral economics as a normative policymaking tool. If that wasn't clear enough, my bad; but, personally, I think it was clear enough.

UPDATE: Greg Goelzhauser of the Law and Economics blog responds here. Admittedly, I got a little testy in responding to his initial post. (In my defense, I hadn't had my morning coffee yet, although that's not much of an excuse, I admit.) But I stand by my substantive point that people are already using behavioral economics to make normative policy recommendations and that I am skeptical of doing so for the reasons developed in both the post and the article.