Thursday, March 13, 2008
Posted by D. Daniel Sokol
Former FTC economist Joseph P. Mulholland of Westport63 Consulting has posted the interesting Behavioral Economics and the Federal Trade Commission.
ABSTRACT: This paper discusses the relevance of behavioral economics to consumer protection policy, especially to that practiced at the U.S. Federal Trade Commission. It finds that a good deal of the decision-making approach utilized at the Commission - as guided by the conventional economic model based on neoclassical principles - fits under the broad framework of what is commonly referred to as behavioral economics. This is especially so in regard to the primacy given to determining how consumers utilize information in the formulation of consumer policy. As a result, the contribution of behavioral economics to consumer protection policy has so far been quite limited. Its impact on future consumer policy will most likely come through improvements in empirical methods used to analyze the behavior of consumers, and in the development of ways to communicate more effectively with them.