Showing papers by "Cass R. Sunstein published in 2022"

Why and When Beliefs Change

Abstract: Why people do or do not change their beliefs has been a long-standing puzzle. Sometimes people hold onto false beliefs despite ample contradictory evidence; sometimes they change their beliefs without sufficient reason. Here, we propose that the utility of a belief is derived from the potential outcomes associated with holding it. Outcomes can be internal (e.g., positive/negative feelings) or external (e.g., material gain/loss), and only some are dependent on belief accuracy. Belief change can then be understood as an economic transaction in which the multidimensional utility of the old belief is compared against that of the new belief. Change will occur when potential outcomes alter across attributes, for example because of changing environments or when certain outcomes are made more or less salient.

Bounded Rationality

Abstract: Two leaders in the field explore the foundations of bounded rationality and its effects on choices by individuals, firms, and the government. Bounded rationality recognizes that human behavior departs from the perfect rationality assumed by neoclassical economics. In this book, Sanjit Dhami and Cass R. Sunstein explore the foundations of bounded rationality and consider the implications of this approach for public policy and law, in particular for questions about choice, welfare, and freedom. The authors, both recognized as experts in the field, cover a wide range of empirical findings and assess theoretical work that attempts to explain those findings. Their presentation is comprehensive, coherent, and lucid, with even the most technical material explained accessibly. They not only offer observations and commentary on the existing literature but also explore new insights, ideas, and connections. After examining the traditional neoclassical framework, which they refer to as the Bayesian rationality approach (BRA), and its empirical issues, Dhami and Sunstein offer a detailed account of bounded rationality and how it can be incorporated into the social and behavioral sciences. They also discuss a set of models of heuristics-based choice and the philosophical foundations of behavioral economics. Finally, they examine libertarian paternalism and its strategies of “nudges.”

An exchange of letters on the role of noise in collective intelligence

Abstract: A key but neglected issue in the search for collective intelligence principles is the role of noise. Does noise inhibit collective intelligence or can it amplify the discovery of intelligent solutions? In this exchange of letters, the authors explore the pros and cons of noise.

“We Test”: An Imagined Regulatory Future

Abstract: Abstract There can be a serious tension between the commitment to cost-benefit analysis and a realistic appreciation of the limits of official knowledge. Without significant efforts to reduce those limits, that analysis might be inadequately informed. Whenever regulators face significant informational deficits, or what is sometimes called “the knowledge problem,” it is important to explore tools that take advantage of what the private sector knows; market-friendly tools, such as economic incentives, have important advantages on that count. An advanced regulatory system should also try to reduce the knowledge problem through three routes: (i) creative use of notice-and-comment rulemaking; (ii) retrospective analysis of regulations and their costs and benefits; and (iii) advance testing, as a way of informing ex ante analysis. For the future, the most promising approach is (iii).

On the limited policy relevance of evolutionary explanations

Abstract: Evolutionary explanations for behavioral findings are often both fascinating and plausible. But even so, they do not establish that people are acting rationally, that they are not making mistakes, or that their decisions are promoting their welfare. For example, present bias, optimistic overconfidence, and use of the availability heuristic can produce terrible mistakes and serious welfare losses, and this is so even if they have evolutionary foundations. There might well be evolutionary explanations for certain kinds of in-group favoritism, and also for certain male attitudes and actions toward women, and also for human mistreatment of and cruelty toward nonhuman animals. But those explanations would not justify anything at all. It is not clear that in Darwinia (a nation in which departures from perfect rationality have an evolutionary explanation), policymakers should behave very differently from Durkheimian policymakers (a nation in which departures from perfect rationality have a cultural explanation).

The Rhetoric of Reaction Redux

Abstract: In The Rhetoric of Reaction, published in 1991, Albert Hirschman identified three standard objections to reform proposals: perversity, futility and jeopardy. In Hirschman's account, these objections define reactionary rhetoric. A proposal would be “perverse” if it would aggravate the very problem it is meant to solve; it would be “futile” if it would not even dent the problem; it would produce “jeopardy” if it would endanger some other goal or value (such as liberty or economic growth). The rhetoric of reaction comes from both left and right, though in Hirschman's account, it is a special favorite of the right. In recent years, the perversity, futility and jeopardy theses have often been invoked to challenge reforms, including nudges. While the three theses are sometimes supported by the evidence, they are often evidence-free speculations, confirming Hirschman's suggestion that the rhetoric of reaction has “a certain elementary sophistication and paradoxical quality that carry conviction for those who are in search of instant insights and utter certainties.”

Injury In Fact, Transformed

Abstract: Previous articleNext article No AccessInjury In Fact, TransformedCass R. SunsteinCass R. Sunstein Search for more articles by this author PDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by The Supreme Court Review Volume 20212021 Article DOIhttps://doi.org/10.1086/720377 Views: 123Total views on this site © 2022 The University of Chicago. All rights reserved.PDF download Crossref reports no articles citing this article.

Beatlemania

Abstract: Why did the Beatles become a worldwide sensation? Why do some cultural products succeed, and others fail? On one view, the simplest and most general explanation is best, and it points to quality, appropriately measured: the Beatles succeeded because of the sheer quality of their music. On another view, timely enthusiasm or timely indifference can make the difference for all, including the Beatles, and informational cascades are often necessary for spectacular success. For those who emphasize informational cascades, success and failure are not inevitable; they depend on seemingly small or serendipitous factors. There is no question that the success of the Beatles, and the rise of Beatlemania, involved an informational cascade. We may doubt that in a counterfactual world there might have been Kinksmania or Holliesmania, but it would be reckless to rule out the possibility that some other band, obscure or unknown, might have taken the place of the Beatles. This article was published open access under a CC BY licence: https://creativecommons.org/licences/by/4.0.

Antitrust and inequality

Abstract: In its current form, antitrust law is sometimes said to advance consumer welfare and to disregard economic inequality. In fact, because monopoly and monopsony benefit shareholders at the expense of workers and consumers antitrust law redistributes resources from (generally wealthier) shareholders to (generally less wealthy) workers and consumers. Antitrust enforcement agencies seeking to reduce inequality might adjust their priorities and target markets that are disproportionately important for low-income people. Agriculture and health care would be good places to start; food and medicine compose a larger share of the budget of low-income people than of others, and these goods are essential to basic well-being. Regulators should also give priority to labor markets, especially labor markets in which lower-income people participate, and especially where pay gaps based on race or gender are large. In some cases, it is also appropriate to consider sacrificing economic efficiency for distributional goals by introducing distributional weights into antitrust analysis; doing so can increase social welfare. At the same time, antitrust law’s contribution to reducing inequality is subject to substantial diminishing returns.

Review of Nudge: The Final Edition Paperback –

Abstract: Has the world changed since Nudge? Has Nudge changed the world? I heard behavioral economics was dead. If that is so, then Nudge is having an enviable resurrection – or we are all in heaven. The irrevocably final version of Nudge, published slightly more than a decade after the original (erstwhile subtitled Improving decisions about health, wealth and happiness) restores a masterpiece with wit, charm, intellect, reflection and relevance that we have come to expect from the synonymous duo of Richard Thaler and Cass Sunstein. It remains as informative, aspirational and instructional as the first, reflecting on both how society has changed and what the field of behavioral economics has learned since 2008. While it is unmistakably a second edition of familiar content, it is also undeniably as relevant as ever for necessary reading across the widest possible audience.