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Behavioral Economic Analysis of Law argues that people do not behave consistent with rational choice theory, and moreover that the deviations from rational behavior are systematic. These systematic deviations from rational choice theory present a challenge to conventional Law and Economics. Nevertheless, this Comment argues that Behavioral Economic Analysis of Law is not in a position to supplant conventional Law and Economics. In many circumstances rational choice remains a reasonable description of individual choice because many -- though not all -- cognitive biases are muted as people learn by experience, work within organizations, or obtain advice from experts. In addition, Behavioral Economic Analysis of Law generally cannot make defensible alternative normative policy prescriptions to govern those circumstances where people are not rational because it does not yet have a coherent, robust, useful alternative model of human behavior to serve as a basis for such recommendations. This Comment demonstrates the limitations of behavioral analysis by examining three cognitive biases: the endowment effect, over optimism, and a concern for fairness. The Comment shows that it is difficult to base policy on these biases because they are present in some circumstances but not in other, often seemingly similar, circumstances. Moreover, it often will be difficult to predict how these biases affect actual decisionmaking because the environment in which people actually operate is far more complex than that of most behavioral experiments. Finally, even when biases are predictable, the normative policy implications are far from clear: government efforts to address biases generally entail the intervention of judges, legislators or bureaucrats who also would be subject to various biases. The very power of the behavioralist critique -- that even educated people exhibit certain biases -- undercuts efforts to intervene to redress them.
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