Response: Can Antitrust Law Incorporate Insights from Behavioral Economics?
Christopher R. Leslie, Response: Can Antitrust Law Incorporate Insights from Behavioral Economics?, 92 Tex. L. Rev. See Also 53 (2014).
In Understanding Behavioral Antitrust, Professor Tor builds on his previous scholarship that explores how insights from behavioral economics can be used to improve antitrust jurisprudence. The Chicago School of law and economics revolutionized antitrust law. By applying insights from microeconomics, scholars associated with the Chicago School introduced more rigor into antitrust analysis. Antitrust law is now viewed through an economics lens. Today, it is essentially impossible to practice antitrust law without understanding several economic concepts.
The field of economics, however, has evolved in ways that undermine the foundations of the Chicago School philosophy. Professor Tor explains how behavioral economics has improved upon the basic microeconomic models that have been so influential in antitrust jurisprudence over the past few decades. The insights from behavioral economics challenge the policy prescriptions associated with the Chicago School. The traditional form of law and economics associated with the Chicago School argues that many aspects of antitrust law are unnecessary because business decision makers are rational and markets are self-correcting. According to this theory, firms do not engage in costly anticompetitive conduct. Behavioral economics identifies several ways in which individuals — and firms — deviate from so-called rationality. The lessons from behavioral economics demonstrate how antitrust enforcement can make markets more efficient than a strict laissez-faire approach.
Professor Tor’s article shows how behavioral economics represents a refinement and improvement over traditional microeconomics. His article does an excellent job of presenting several of the cognitive biases that form the corpus of behavioral economics. Professor Tor also notes that when asking antitrust agencies and courts to incorporate behavioral economics, we should consider “the limits of these institutions.” This Response uses Professor Tor’s cautionary note as its starting point by exploring the issue of judicial resistance to incorporating the insights from behavioral economics into antitrust jurisprudence.
This Response will proceed in three parts. Part One briefly reviews the traditional law and economics approach to antitrust problems and how behavioral economics can inform antitrust jurisprudence. Part Two expands on Professor Tor’s observation that courts may resist behavioral antitrust and explores the reasons why, the primary reason being the relative simplicity of basic microeconomics compared to the more nuanced explanation of business behavior offered by behavioral economics. Finally, Part Three argues for less reliance on theory and greater appreciation of facts in antitrust litigation.