Behavioral Economics and the Regulation of Technology

Behavioral economics has increasingly become a key part of the toolkit of many policymakers and regulators, with applications across a range of policy fields. Many technology firms also use behavioral economics concepts extensively – however, there has been relatively little application in the field of technology regulation. This article explains what behavioral economics is and how it can be applied to issues in the technology space, and highlights some of the nascent work by regulators to tackle technology-related behavioral issues. It closes by suggesting some potential future avenues for regulation.

By Ravi Dutta-Powell^[1]

I. INTRODUCTION

Since the publication of Nudge in 2009,^[2] behavioral economics (also referred to as behavioral insights or behavioral science) has increasingly become a key part of the toolkit of many policymakers and regulators. It has been applied in policy fields as varied as health, education, taxation, justice, and consumer behavior. This demonstrates a growing recognition that human behavior is complex and varied, and that traditional policy approaches have often failed to adequately reflect this. However, whilst behavioral economics has seen significant uptake among, for example, financial regulators, it is still relatively new in the field of technology regulation. This article will explain what behavioral economics is, how it can apply to technology, how regulators are already using behavioral economics, and then consider where