Foundations of Law and Economics
Advanced
Behavioral Market Failure
A market failure that arises when firms respond to consumers' systematic mistakes, limited attention, optimism, present bias, or misunderstanding of complex products.
Why It Matters
Behavioral market failure is central to consumer finance, securities disclosure, standard-form contracts, product design, and debates over whether competition corrects or exploits mistakes.
Selected Literature
A short list of directly relevant archive entries.
1984
Intermediate
Market Failure and the Economic Case for a Mandatory Disclosure System
John C. Coffee Jr.
Virginia Law Review
1998
Advanced
A Behavioral Approach to Law and Economics
Christine Jolls, Cass R. Sunstein, and Richard H. Thaler
Stanford Law Review
2003
Advanced
2012
Advanced
Seduction by Contract: Law, Economics, and Psychology in Consumer Markets
Oren Bar-Gill
Oxford University Press
Related Cases
1854
Foundations of Law and Economics
Hadley v. Baxendale
9 Exch. 341, 156 Eng. Rep. 145 (1854)
Foreseeability, information disclosure, and limits on consequential damages for breach of contract.
1707
Foundations of Law and Economics
Keeble v. Hickeringill
11 East 574, 103 Eng. Rep. 1127 (K.B. 1707)
Property protection, malicious interference, and incentives to make productive use of land.
1805
Foundations of Law and Economics
Pierson v. Post
3 Cai. R. 175 (N.Y. Sup. Ct. 1805)
First possession, capture rules, and the administrability of property rights in wild animals.
1879
Foundations of Law and Economics
Sturges v. Bridgman
11 Ch. D. 852 (1879)
Nuisance, coming to the nuisance, and reciprocal conflicts over incompatible land uses.