Dear Readers,
Behavioral economics has increasingly become a key part of the toolkit of many policymakers and regulators, with applications across a range of policy fields.
Amelia Fletcher opens by discussing the EU Digital Markets Act (“DMA”), which contains several provisions which reflect important behavioral insights, and in particular the importance of choice architecture for end user decision-making. This article discusses three roles played by such insights. First, several DMA obligations address conduct whose anticompetitive effects arise from the interlinkage between choice architecture and end user behavior. Second, certain DMA obligations more explicitly cover the choice architecture facing users. Third, the heavy emphasis on effectiveness within the DMA creates a potential role for behavioral insights.
Ravi Dutta-Powell discusses how 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.
Avishalom Tor discusses how digital nudges — that is, significantly behavioral interventions that use software and its user-interface design elements — are an increasingly pervasive feature of online environments that can shape people’s behavior both online (e.g. changing website cookie settings) and offline (e.g. taking a flu vaccine due to a text message reminder). While sharing many characteristics of offline behavioral interventions, digital nudges merit specific attention and analysis due to their growing ubiquity and potential potency.
In turn, Michael Sobolev & Vedran Lesic describe online choice architecture (“OCA”), which encompasses the set of design features that impact choice in digital environments. From default settings and notifications to personalization and recommender systems, OCA features are present in almost every interaction with technology. Existing evidence on the effects of OCA on human behavior have often been one-sided, focusing either on positive or negative outcomes. In online settings, the effect of OCA practices on consumer welfare is often complicated. In this paper, we describe the design process and practices of OCA, analyze applications of OCA for good and for bad, and discuss future direction for research and practice of OCA design.
Timothy Brennan notes that while most regulatory scrutiny of the big tech sector is couched in terms of competition or lack thereof, behavioral economics may provide rationales outside that framework. Behavioral economics is generally problematic as a policy guide, as it undercuts the basis for benefit cost analysis and invites policy makers to substitute their preferences for those of the public they presumably serve. However, it suggests some potential rationales based on thinking being costly and weakness of will.
Julia M. Puaschunder describes how the digital millennium leveraged the World Wide Web into a powerful information source. Online internet searchplaces guide human everyday decisions. The strategic placement of information in search engine results has become increasingly important in corporate and political settings. Virtual competition derails in negative search engine de-optimization and unethical strategic searchplace manipulation that degrades the perception of a search term by pushing out competitors’ quality content from search engine results. This article discusses technicalities of searchplace discrimination in erasing useful information about competition for negative, unrelated, spamming, or harmful contents.
Finally, Andrea Asoni describes how behavioral economics has become an additional tool at the disposal of antitrust agencies and defense counsel. While the findings of behavioral economists are often considered justification for additional government regulation of the free market, a growing behavioral literature suggests caution against excessive intervention. It is sometimes overlooked that behavioral biases that affect consumers and firms, can and often do affect policymakers. Furthermore, because of the nature of the political process, policies may rather institutionalize rather than overcome behavioral biases.
In sum, this set of articles provides valuable insights into the developing field of behavioral economics and its growing list of applications in the regulation of the online world.
As always, many thanks to our great panel of authors.
Sincerely,
CPI Team
