From:  RegBlog/Penn Program on Regulation

President Obama’s Executive Order 13563 for the first time in history encouraged administrative agencies to draw upon the behavioral sciences in the design and implementation of new regulations.  To date, however, agencies have received no practical guidance on how to integrate behaviorally inspired regulatory instruments into the regulatory process.  How can public administrators transform behavioral research findings into operational regulatory tools while ensuring protections for citizens in a new, “nudging” state?

In a forthcoming paper, New York University School of Law’s Alberto Alemanno and the University of Milan’s Alessandro Spina analyze how empirical findings from behavioral research can complement traditional regulation.
From its mid-20th century origins in the late Herbert Simon’s theory of bounded rationality to Richard Thaler and Cass Sunstein’s recent best-seller, Nudge, the idea that humans make imperfect decisions has become mainstream, say Alemanno and Spina.  Behavioral research has given scientists ever-greater insight into the cognitive biases, fallacies, and heuristics driving human action.  Moreover, the argument that regulation must consider how targeted people respond in order to be effective has caught fire among academics and policy architects alike, according to the authors.

In spite of policymakers’ and agencies’ growing enthusiasm for behaviorally driven regulation, a clear legal framework for turning behavioral insights into operational regulatory tools is largely absent, Alemanno and Spina say.  Without a fully transparent mechanism for incorporating behavioral research findings into policy-making, the authors argue, the burgeoning field’s potential to help policy makers will be lost.  Alemanno and Spina believe that both EU and U.S. regulators could benefit from systematic integration of behavioral research into policy creation.

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