Research Handbook on Behavioral Law and Economics
Show Less

Research Handbook on Behavioral Law and Economics

Edited by Joshua C. Teitelbaum and Kathryn Zeiler

The field of behavioral economics has contributed greatly to our understanding of human decision making by refining neoclassical assumptions and developing models that account for psychological, cognitive, and emotional forces. The field’s insights have important implications for law. This Research Handbook offers a variety of perspectives from renowned experts on a wide-ranging set of topics including punishment, finance, tort law, happiness, and the application of experimental literatures to law. It also includes analyses of conceptual foundations, cautions, limitations and proposals for ways forward.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 2: Behavioral probability

Alex Stein

Abstract

Humans have adapted to their uncertain environment by the method of trial and error. This evolutionary process made them reason about uncertain facts the way they do. Behavioral economists censure this mode of reasoning for violating the canons of mathematical probability that a rational person must obey. Based on insights from probability theory and the philosophy of induction, Stein argues that a rational person need not apply mathematical probability in making decisions about individual causes and effects. Instead, she should be free to use common sense reasoning that generally aligns with causative probability. Stein also shows that behavioral experiments miss their target when they ask reasoners to extract probability from information that combines causal evidence with statistical data. Because it is perfectly rational for a person focusing on a specific event to prefer causal evidence to general statistics, Stein argues, those experiments establish no deviations from rational reasoning.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.