Educating Citizens: The Choice for Paternalism

Liberal political philosophy has two alternative options in principle: It can either stick to its original theorems such as the harm principle or the separation of law and morals and from here try to prove large parts of present social and political reality as wrong, illegitimate, dangerous etc. The other option is trying to adjust the original theorems to the apparent needs of modern societies, which is what I would prefer in the long run.

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Constitutional Limits to Paternalistic Nudging in Germany

Nudges with paternalistic aims pose special legal problems in liberal States. Surprisingly, the discussion on regulation-by-nudging has not focused on the constitutional limits to nudging. Although the property rights of firms potentially infringed by nudging measures are dealt with in the literature and by (international) courts (e.g. the tobacco cases), the potential infringement of the rights of those being nudged is neglected. But judges may at one point be confronted with a nudge regulation challenged by the individuals being nudged; and even before reaching a court, the legality of nudging should be scrutinised by legislators. I explore the legal limits of paternalistic nudging under the German Constitution, especially the right to freedom of action and self-determination under Art. 2 (1) German Basic Law.

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Information and Paternalism

Disclosure mandates are often considered to be the least paternalistic of all regulatory techniques. Indeed, information provision is believed to enhance both autonomy and efficiency by facilitating more informed decisionmaking. According to this traditional approach, disclosure regulation – a key instrument in the Nudge toolbox – is beyond reproach. Legitimacy concerns might be raised with respect to other Nudge-type interventions (specifically, the setting of default rules), but not disclosure. I propose a two-pronged challenge to this conventional wisdom.

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Nudging as a Matter of Politics

Nudging is about effective solutions for social problems and a parallel case to other regulatory approaches. It fits into the tradition of rational policy-making. It requires a political decision on whether or not nudging should be chosen as an instrument to remedy the social costs entailed with risky behavior. And from a legal point of view it has to be reviewed whether the measure chosen is not a disproportionate loss of freedom for the individual. This requires balancing the interests. As nudging is a matter of politics we have to discuss it in the political arena.

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Getting nudges right – interests, norms and the legitimacy of choice architecture

While the general approach of choice architecture of altering the decision contexts of individuals without limiting freedom of choice should provide several innovative and efficient regulatory tools, the criticism by various scholars usually focuses on the following: Critics claim that the influence of the regulatory state in dictating socially desirable goals to be achieved through […]

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Bounded Rationality and the Concept of Materiality in Securities Regulation – How rational is the “reasonable investor”? (Abstract)

The concept of materiality – in the EU known as (price) relevance – is key to both the insider trading ban and the continuous disclosure obligation under EU and US securities regulation. The insider trading bans prohibit market participants from trading on non-public, material information. The EU continuous disclosure obligation requires issuers of financial instruments […]

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Nudging and Uncertainty (Abstract)

In three respects, behaviorally informed governance faces much deeper uncertainty than traditional intervention. The first source of uncertainty is theoretical. Many empirically well-established behavioral effects are still not well understood. The second source of uncertainty is empirical. Despite the richness of many experimental literatures, many effects are still disputed. It is always up to debate […]

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Nudge and the European Union

Europe has largely been absent from the US-dominated debate surrounding the introduction of nudge-type interventions in policy-making. As the EU and its Member States are exploring the possibility of embracing nudging, it appears desirable to reframe such a debate so as to adapt it to the legal and political realities of the European Union.

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