Dear Readers, We are pleased to kick off 2019 with an edition of the CPI Antitrust Chronicle devoted to the latest developments in Behavioral Antitrust. Behavioral economics is generally defined as “a method of economic analysis that applies psychological insights into human behavior to explain economic decision-making.” Economic analysis has long held an important role […]
By Avishalom Tor – The accepted economic justification for antitrust law rests on the neoclassical microeconomic model that shows that perfect competition maximizes efficiency and welfare. This model assumes that consumer demand reveals rational consumer beliefs and preferences. Yet an otherwise competitive market that caters to “erroneous” demand based on consumers’ mistaken beliefs or constructed, […]
By Amelia Fletcher – The recent EU Google decisions may represent a high-water mark for the use of behavioral economics in EU antitrust to date, but what do they imply for competition policy in the future? Do such cases represent the outer extremes of how far behavioral thinking can and should be taken? Or do they […]
By Andreas Heinemann – Traditionally, economic analysis is based on the homo economicus-hypothesis: Perfectly rational, strong-minded and self-interested persons and entities maximize their own utility or profit. By contrast, behavioral economics takes into account biases, inconsistent preferences, and altruism thus giving a more realistic view of decision-making. Competition law has always had an inclination to […]
By Elizabeth M. Bailey – Modern day antitrust analyses are grounded in traditional neoclassical economics theory, assuming consumers and firms are rational, profit maximizing entities. While allowances are made for consumers to depart from neoclassical theory in consumer protection, the enforcement of antitrust policies continues to assume firms as rational, profit-maximizing entities. However, empirical literature […]
By Christopher Leslie – Antitrust law often requires judges to place themselves in the position of one of the litigating parties at an earlier time and to make predictions, as of that point in time, about future outcomes. This invites hindsight bias. For example, in attempted monopolization cases, judges often assert that if the defendant […]
By Stephen Martin – U.S. Supreme Court decisions dictate that evidence in antitrust cases should be interpreted in accordance with the realities of competition in the marketplace, but seem to interpret such evidence as if the characteristics of most markets were close to the assumptions of the economic model of perfect competition. This is inconsistent […]
By Max Huffman – Behavioral antitrust has proved to have staying power, with continued attention as an area of scholarly inquiry now two decades after the foundational work in behavioral law and economics was published. This short article revisits the origin and meaning of behavioral antitrust and highlights a few areas of its application. The […]
By Adam Candeub – The internet and social media have become our public square. If market dominance or unfair commercial practices allow dominant online platforms to diminish discourse, antitrust law and the FTC or FCC might respond. Developed to understand television markets, video economics, if applied to internet-viewing, suggest that the dominant social media platforms […]