Edited by Josef Drexl, Warren S. Grimes, Clifford A. Jones, Rudolph J.R. Peritz and Edward T. Swaine
Chapter 1: Are People Self-interested? The Implications of Behavioral Economics on Competition Policy
Maurice E. Stucke* INTRODUCTION 1 For 30 years, the neoclassical economic theories associated with the University of Chicago1 have shaped American competition policies. These * The author wishes to thank Warren Grimes, Christopher Sagers, D Daniel Sokol, Gregory M Stein, Avishalom Tor, Spencer Weber Waller, Dick Wirtz, Michael Wise and the participants of the 4th ASCOLA conference, the Competition Law Forum on Behavioral Economics, and the Max Planck Institute for Research on Collective Goods for their helpful comments, and the University of Tennessee College of Law and the W Allen Separk Faculty Endowment for the summer research grant. This chapter is based on a longer article that was published in (2010) 50 Santa Clara L Rev 893. 1 It is important to recognize that the beliefs of some Chicago School theorists evolved over time. See RA Posner, ‘The Chicago School of Antitrust Analysis’ (1979) 127 U Pa L Rev 925, at 932 (noting that some ideas first advanced by one of the School’s founders Aaron Director ‘have been questioned, modified, and refined, resulting in the emergence of a new animal: the “diehard Chicagoan” (such as Bork and Bowman) who has not accepted any of the suggested refinements or modifications in Director’s original ideas’). At times, its theorists have clashed over competition policy or in their beliefs in market forces. Nobel laureate Ronald H Coase, who is commonly associated with the Chicago School, for example, rejected the self-interest assumption as ‘consumers without humanity’. He observed that the ‘rational utility maximizer of economic...
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