Behavioral Theories of Judgment and Decision Making in Legal Scholarship: A Literature Review

Article excerpt

I. INTRODUCTION

Nearly all interesting legal issues require accurate predictions about human behavior to be resolved satisfactorily. Judges, policymakers, and academics invoke mental models of individual and social behavior whenever they estimate the desirability of alternative rules, policies, or procedures. Contemporary legal scholarship has come to recognize that if these predictions are naive and intuitive, without any strong empirical grounding, they are susceptible to error and ideological bias. Something more rigorous is thus expected when normative claims are advanced, and the place of the social sciences has expanded in legal discourse to satisfy this expectation.l

Three branches of the social sciences-economics, psychology, and sociology-offer the most obvious assistance in predicting everyday human behavior, and each has a well-recognized history of influence on legal scholarship. The legal realists-most notably, Jerome Frank-took psychology quite seriously half a century ago; "sociological jurisprudence" came to prominence shortly thereafter, and law and society studies are still highly visible. But as many have said so often, both psychology and sociology have suffered from the inability to generate a unified behavioral model rivaling the simplicity, elegance, and testability of the economist's utilitymaximizing rational actor. For this reason (and probably a host of otherss), the rational actor model came to dominate predictions about how "normal" persons and groups respond to legal incentives. By the late 1970s and early 1980s, law and economics was the one social science-based approach to have a truly pervasive effect on legal thinking. "Law and psychology" for some time was largely the study of either marginal segments of the population, such as the criminally insane, or specialized procedural subjects like jury behavior and eyewitness recall.4

At roughly the same time that economics was rapidly diffusing into law,5 work by cognitive and social psychologists challenging the orthodox presumption of rational human behavior was becoming more prominent in the social sciences. To be sure, psychology has long claimed that human behavior is complex and contingent, and theories like cognitive dissonance (not to mention a broad range of psychoanalytic constructs) have for some time been available to question the decision making of otherwise normal members of society.e But the mid to late 1970s and early 1980s brought distinct focus and attention to the new subdiscipline of "behavioral decision theory" within cognitive and social psychology. Work by researchers such as Amos Tversky, Daniel Kahneman, Hillel Einhorn, Robin Hogarth, Arie Kruglanski, Lee Ross, Richard Thaler, and many others suggested that there are heuristics, biases, and other departures from rational decision-making processes that are systematic and predictable and can thus be modeled and tested with a fair degree of rigor.7 The challenge to orthodox economic theory was plain, and a debate between the disciplines quickly began.8 This debate is still far from resolved.9 Conventional economics remains an extraordinarily powerful discipline, but within economics there is an increasing willingness (sometimes grudging, sometimes not) to take the psychologists' empirical claims seriously-even in market settings. Transaction cost economics accepts that the rationality of economic actors is "bounded," to use Herbert Simon's phraseology, and bounded rationality can include cognitive imperfection as well as informational limits.lo "Behavioral economics" has become an accepted subdiscipline within economics, and papers in the best economics and finance journals are more and more apt to make unsarcastic reference to the psychological literature. A pointed illustration of this interdisciplinary accomodation is the venerable Quarterly Journal of Economics' dedication of its May 1997 issue to the work of the late Amos Tversky, who pioneered behavioral decision theory. …