College of Law Faculty Scholarship

Source Publication (e.g., journal title)

Indiana Law Journal

Document Type

Article

Publication Date

January 2011

Abstract

Competition policy is entering a new age. Interest in competition laws has increased world-wide, and the United States no longer holds a monopoly on antitrust policy. In the aftermath of the financial crisis, the question for competition authorities is whether and to what extent does bounded rationality, self-interest and willpower matter.

This article explores how the behavioral economics literature will advance competition policy. With increasing interest in the United States and abroad in the implications of behavioral economics for competition policy, this Article first provides an overview of behavioral economics. It next discusses how the assumption of rational, self-interested profit-maximizers became so embedded in competition policy. The Article then discusses to what extent the behavioral economics literature can inform antitrust policies, and provides several recommendations related to the practical application of behavioral economics to competition policy going forward.

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