31 Jan 2007Working Paper Summaries

Behavioral Decision Research, Legislation, and Society: Three Cases

by Max H. Bazerman

Insights about how people make decisions have enormous importance for society and public policy, yet often behavioral decision findings are overlooked or dismissed in favor of arguments based on sometimes-simplistic economic theory. This is particularly true in Washington, D.C., where Bazerman provided expert testimony in government cases on auditor bias, pharmaceutical company collusion, and big tobacco, respectively. His experiences highlight the barriers to the use of the most appropriate social science under the existing legal and legislative frameworks. In this article that is based on analysis and opinion, he tells what happened and reflects on the need for social sciences, in addition to economics, to be brought to the legal and policy-making domains. Key concepts include:

Economic logic lies behind preventable disasters that range from accounting scandals to the many avoidable deaths resulting from the U.S. organ donation system.
Creating wise policies in society means updating our understanding of unconscious or unintentional processes in decision making and recognizing how social science today is based on rigorous science.
Economic logic plays an important role in the policy-making process, but it should not be used at the expense of other social science knowledge.
A smoking gun is not necessary to show that an institution is set up to encourage wrongdoing.
For behavior-decision reasons, organizations are likely to prefer a status quo. Too often, when it comes to public policy, the status quo either prevails or inappropriately influences future activity.