Project outline
The last decade has increased the significance of the Law Commissions- there is one for England & Wales and a separate one for Scotland- in the design and implementation of law reform. This projects considers the extent to which this essentially ‘legal’ function would be improved by a broader consideration of how legal rules influence behaviour in markets and in society more generally. The rise of ‘Nudge’ and behavioural science is well known, but it has not been extensively considered as part of the design of private law. This project seeks to correct that by communicating how Law Commissions could draw on advances in legal theory, political science and behavioural economics to assist in the development of ‘smart regulation’ which is road tested before and after implementation.
A scoping paper on this topic by the two lead participants, Dr Cliona Kelly & Professor James Davey, was delivered in September 2015 at University College Dublin and provides the impetus for the project.
This paper identified issues within the traditional approach to commercial law design, in particular the lack of a reflective approach and the lack of evidence to support assumptions that are made regarding how commercial law works in practice. We argue that commercial law design fails to reflect how commercial parties actually behave. We set out a three part strategy to combat this: stage one is a behaviourally-informed analysis of the default rules which are the backbone of commercial law; stage two is an experimental approach to the design of commercial law, creating a virtual space where policymakers can experiment with different solutions; and stage three is a form of “regulatory lookback”, i.e. a structured review of commercial law rules after enactment.
The next stage of the project aims to develop these ideas by consulting with relevant stakeholders. This is intended as a ‘two way’ knowledge transfer. We will be seeking to understand the constraints (funding and organisational) on moving beyond a purely legal analysis of commercial contract market issues, whilst communicating our proposals to embed insights from political science and economics within the design of commercial law.
Meet the research team
This project brings together expertise in commercial law and policy from the Southampton University, University College Dublin, The University of Minnesota and Cardiff University.
It is led by Professor James Davey of Southampton Law School who has written extensively on insurance law and its relationship to behavioural economics. This work spans questions as to why insurance contracts impose duties but not matching remedies; why the law (wrongly) trusts spouses not to kill each other for life insurance monies and why parties replace inefficient contractual rules with the nearest ‘least bad option’ rather than ideal rules.
Dr Cliona Kelly of University College Dublin has shown how behavioural economics can be of assistance when analysing commercial law reform proposals and even human rights decisions (in S. Egan et al The ECHR and Ireland: 60 Years and Beyond (Bloomsbury, 2014)).
Professor Claire Hill will be a visiting Professor at University College Dublin in 2016, on research leave from the University of Minnesota. She is an internationally recognised expert on corporate and commercial law, with a substantial publication record on the application of law & economics and law & behavioural economics within this field.
Katie Richards is an early career researcher with a growing reputation in behavioural analysis of deterrence as goal in the design of private law. This will inform the project in its analysis of societal responses to mandatory rules within legislation.
