Matching probabilities: The behavioral law and economics of repeated behavior

Ehud Guttel*, Alon Harel

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

14 Scopus citations

Abstract

Individuals often repeatedly face a choice of whether to obey a particular legal rule. Conventional legal scholarship assumes that whether such a choice is made repeatedly or is a one-time event has no effect on individuals' decisions. In either case, individuals are expected to maximize their payoffs. Experimental studies, however, suggest that individuals facing a recurring choice, in contrast to individuals making the choice only once, do not behave as maximizers. Instead, individuals facing the choice repeatedly apply the strategy of "probability matching." For example, individuals failed to maximize when presented with a die with four red faces and two white faces, and asked to predict the colors of a series of rolls. Although maximization demands consistently betting on the red, individuals preferred a "mixed" approach; red was chosen in 2/3 of the rolls and white in 1/3 of the rolls. This Article presents several normative and descriptive applications that probability matching has in the legal context. Normatively, it shows how probability matching affects optimal investment in law enforcement. Descriptively, it suggests that probability matching provides a new rationale for existing legal doctrines, such as the imposition of punitive damages on repeated wrongdoers, the imposition of harsher sanctions on recidivists, and rules attributing liability for the mere infliction of risks. This Article thus shows that experimental findings corroborate the intuition that law ought to, and in fact does, differentiate sharply between repeated and single-instance behavior.

Original languageAmerican English
Pages (from-to)1197-1236
Number of pages40
JournalUniversity of Chicago Law Review
Volume72
Issue number4
StatePublished - Sep 2005

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