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Jonathan Baron

This chapter argues that many administrative decisions made by governments, courts, and other institutions could benefit from estimates of utility, roughly the overall effect of decisions on people’s achievement of their goals. Baron suggests that utility is not the same as monetary outcomes or other objectively measurable quantities. After putting this approach in the context of other ways of evaluating programs, he reviews some of the problems of utility measurement and suggest possible solutions. It suggests that contingent valuation, a widely used method for obtaining money equivalents, is usually insensitive to the quantity of the good being evaluated, but this problem might be avoided by using per-unit pricing and/or by requiring responses on both attributes (money and the good in question). Thus, valuation of consequences can also be distorted by provision of information about how the consequences are achieved. In the second part, it reports a study showing how valuation can also be improved by stripping away information other than the consequences of interest; most subjects did not think that removal of the extra information was unfair. Therefore he suggests that conjoint analysis, another method in which respondents rate or choose objects that vary in attributes such as cost and various dimensions of benefit, seems promising because it is often sensitive to quantity, but it can suffer from the problem that people limit their attention to a few attributes, possibly even one.

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Jonathan Baron and Tess Wilkinson-Ryan

Baron and Wilkinson-Ryan outline the conceptual foundations of behavioral law and economics. The authors concentrate on the behavioral concepts imported into the field from psychology and experimental economics, and survey the normative models, descriptive theories, and prescriptive approaches featured in behavioral law and economics research. They endeavor to point out common themes in the research in an effort to tie together various groups of findings and counter the criticism that the field lacks the cohesion of standard law and economics.