Consumer Law and Economics

Co-Editor Book Chapter Avishalom Tor, The Target Opportunity Costs of Successful Nudges, in Consumer law and Ecomonics 3 (Avishalom Tor & Klaus Mathis eds., 2021) Nudges are increasingly popular, in large part due to the typically low costs required to implement them. Yet most often the main cost of nudging is due not to their implementation, but rather to the opportunity costs of its successful change of the behavior of its targets. Accounting for these target opportunity costs is essential for the appropriate assessment of the welfare effect of nudges. Nonetheless, the extant literature on behavioral policies largely ignores these costs or underestimates their magnitude and, consequently, overestimate the net benefits of nudges. At times, nudges remain the most attractive policy alternative even after their opportunity costs are accounted for. On other occasions, however, traditional instruments or a no-intervention approach turn out to make more efficient policy alternatives.https://scholarship.law.nd.edu/law_books/1387/thumbnail.jp