Prospect Theory, Risk Preference, and the Law
Chris Guthrie argues that legal scholars need a model of human decision making to predict how people respond to legal rules, and that behavioural law and economics has turned to Kahneman and Tversky's prospect theory rather than rational choice theory. The article concentrates on the theory's finding that people tend to avoid risk when facing gains and seek risk when facing losses. It reviews legal scholarship that applies the idea across several areas of doctrine and notes limits, including external validity and differences between individual and group decisions. It concludes that prospect theory is a valuable tool for legal scholars and policy makers.
Chris Guthrie argues that legal scholars need a model of human decision making to predict how people respond to legal rules, and that behavioural law and economics has turned to Kahneman and Tversky's prospect theory rather than rational choice theory. The article concentrates on the theory's finding that people tend to avoid risk when facing gains and seek risk when facing losses. It reviews legal scholarship that applies the idea across several areas of doctrine and notes limits, including external validity and differences between individual and group decisions. It concludes that prospect theory is a valuable tool for legal scholars and policy makers.
Written from the abstract as shown on the Vanderbilt University repository record, read 2026-10-28.
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97, 1115. https://ir.vanderbilt.edu/handle/1803/5906