Spotlight Research: Understanding Behavioral Antitrust
Avishalom Tor, Understanding Behavioral Antitrust, 92 Texas Law Review 573 (2014)
This research examines, organizes, and further develops the recently popular and hotly debated “behavioral antitrust” – an approach that applies to antitrust analysis the empirical evidence of robust behavioral deviations from strict rationality.
This Article shows that both proponents and opponents of behavioral antitrust frequently and fundamentally misconstrue its methodology, treating concrete empirical phenomena as if they were broad hypothetical assumptions. Because of this fundamental methodological error, scholars often make three classes of mistakes in behavioral antitrust analyses: First, they fail to appreciate the variability and heterogeneity of behavioral phenomena; second, they disregard the concrete ways in which markets, firms, and other institutions both facilitate and inhibit rational behavior by antitrust actors; and, third, they erroneously equate all deviations from standard rationality with harm to competition. After establishing the central role of rationality assumptions in present-day antitrust and reviewing illustrative behavioral analyses across the field—from horizontal and vertical restraints, through monopolization, to merger enforcement practices—the Article examines the three classes of mistakes, their manifestation and their consequences in antitrust scholarship. Besides providing guidance to future behavioral antitrust scholarship, the Article concludes by discussing two sets of essential lessons that the behavioral approach already can offer to advance antitrust law and policy: One concerning the value of case-specific evidence in antitrust adjudication and enforcement, the other showing how antitrust law can and should account for systematic and predictable boundedly rational behavior that is neither constant nor uniform.
- The Market, The Firm, and Behavioral Antitrust in The Oxford Handbook of Behavioral Economics and the Law (Doron Teichman & Eyal Zamir eds.) (forthcoming 2014).
- The Psychology of Competition: A Social Comparison Perspective, 8 Perspectives on Psychological Science 634 (2013) (with Stephen M. Garcia & Tyrone M. Schiff).
- Some Challenges Facing a Behaviorally-Informed Approach to the Directive on Unfair Commercial Practices in Unfair Commercial Practices: The Long Road to Harmonized Law Enforcement 9 (Tihamer Toth ed. 2013).
- The Innocence Effect, 62 Duke Law Journal 343 (2012) (with Oren Gazal-Ayal).