|
BIAS |
DESCRIPTION |
IMPLICATION FOR REGULATORS |
|
Availability heuristic |
Place undue weight on recent, salient events |
Engage in regulatory overreaction |
|
Hindsight bias |
Overestimate the ex ante probability of an event occurring given that it has occurred |
Are too likely to find that practices causing harm violated a legal standard |
|
Myopia/hyperbolic discounting |
Discount future benefits at too high a rate versus current costs |
Pursue policies that maximize short-run rewards rather than long-run goals |
|
Confirmation bias |
Discount true information contrary to prior beliefs |
Resistant to change regulatory course even in face of contrary evidence |
|
Optimism |
Overestimate the probability of a good outcome |
Overestimate the success of a regulatory initiative |
|
Status quo bias |
Are irrationally wedded to current state |
Cause regulatory inertia and path dependency |
The cognitive biases of regulators by James Cooper
18 Dec 2014 Leave a comment
in behavioural economics, comparative institutional analysis, economics of regulation
Utopia, you are standing in it! 
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