Behavioral Economics and the Law
Behavioral economics and the law
February 1, 2021
As you know from my previous newsletters, behavioral economics (BE) looks at human biases and cognitive limitations in decision making. My focus has been on financial decision making, but BE has many applications in other arenas, for example, in law.
What makes the law substantially different from many other areas of human activity regarding cognitive biases is a curious notion embedded in the foundation of most legal systems in the free world: all citizens have the right, if accused of a crime, of a fair trial with an impartial judge, jury or both. Impartial implies “without bias.”
But is that ever possible where humans are involved? And are courtrooms somehow a miraculous oasis of exception? Extensive research generally shows the opposite, unfortunately.
Let’s picture the cast of characters for a criminal trial: a judge, a jury (sometimes), a prosecutor, a defense attorney, the defendant, and witnesses. All carry with them biases in some degree.
Arguably the most obvious bias would be racial bias. Judge and juries might harbor racial bias, perhaps not consciously, as might the defense attorney and prosecutor. Consistent with this conjecture, there is evidence that Black offenders get longer sentences than whites for the same crime, even after controlling for other factors that influence the sentence decision.[1]
Confirmation bias was discussed in the May 1, 2020 newsletter. Once a juror or judge has a leaning (guilty, not guilty), that person is more open to information (e.g., testimony) that supports that view and tends to play down information that does not. And that does not take long. We begin to form judgments about trustworthiness and aggression in as little as 34 milliseconds![2]
I know from having served on a jury for a criminal trial (2nd degree murder) that we are instructed not to form any opinion about the guilt or innocence of the defendant. But it is easy to do nonetheless, if only subconsciously. For starters, appearances can be crucial. A tattoo, the manner in which the defendant speaks, the way he is dressed, the appearance of his lawyer—all might strengthen an initial judgment about the defendant.
Witnesses may let their opinion sway what to emphasize or volunteer in testimony; what gets remembered over time might change in accordance with their view of the defendant.
Overconfidence, aka hubris, was the subject of the September 1, 2020 newsletter. Someone who is considering committing a criminal act might be overconfident about their chances of getting away with it. If caught, they might be overconfident about “beating the rap,” leading them to turn down a reasonable plea bargain.
Their lawyer might be overconfident, with potentially the same outcome.
Witnesses might well be overconfident about what they really saw—memories are notoriously fickle.[3]
Overconfidence might also be at play in a civil trial, leading someone to sue with very little chance of winning the lawsuit.
One interesting narrative that you might have heard: Judges make more favorable parole decisions after they’ve eaten, that is, first thing in the morning and after lunch.[4] However, a follow up paper showed that prisoners without lawyers receive parole at a lower rate and that prisoners without representation are typically scheduled at the end of sessions, that is, before breaks.[5] It is probably the lack of lawyer representation that drives the finding.
This narrative is a fine example of the difference between correlation and causation, the subject of last month’s newsletter. It is also an example of “bias bias,” the tendency to look for biases when they are not present.
What are the practical applications of this knowledge? My first suggestion is not to commit a crime. My second suggestion is, in the event you are accused of a crime, try to avoid overconfidence by asking yourself, “What if my judgment is wrong?” My third suggestion is to get a haircut and dress well when your parole hearing comes up.
[1]https://repository.law.umich.edu/cgi/viewcontent.cgi?article=2413&context=articles
[2] Maria Konnikova, The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win, Penguin Books, 2020, p. 198.
[3]https://www.pnas.org/content/114/30/7758
[4]https://www.pnas.org/content/108/17/6889?ijkey=02cd11a80bb706a8a8296e760f84b0b08ba32b3b&keytype2=tf_ipsecsha