Duke Law and Economics Society.
​Fifth Annual Triangle Law and Economics Conference​.
Susanna Blumenthal
Professor, Minnesota Law.
Susanna Blumenthal moderates this panel. She asks, "How may Behavioral Economics be used to discourage and prosecute fraud?" She additionally questions how it may change the conversation about fraud and bring clarity to its different conceptions. Click below for panelist introductions, these questions, and a final thought of her own.
Bill Black
Professor, UMKC School of Law.
Fraud has become endemic to our financial institutions. Behavioral Economics that focuses solely on financial consumer behavior will have no effect if the fraud within these institutions is not rooted out. Therefore, Behavioralism must be used to incent executives to think longer term, and must signal a change to joint and several liability.
Sam Buell
Professor, Duke Law.
The key to eliminating fraud is to change the industry-specific expectations about what constitutes fraud in the first place. In order to address this, businesses must align their interests with the long-run value of integrity over short-term gains at its expense. Projecting a higher probability of sanction on wrongdoers may also help.
Bob Pringle
Partner, Winston and Strawn.
Behavioral Economics may have a big role in legal practice going forward, in its capacity as expert testimony. It may become the primary source of information in areas where traditional law and economics once tread. It may also serve a deterrent function through the furthering of technology's capacity to detect fraud, and by strengthening sanctions.
Ed Balleisen
Professor, The Kenan Institute for Ethics.
Fraud has continued to exist in part because many accusations of fraud have been dismissed as mere "whinging." Changes in economic structures have also helped hide rampant fraud. Behavioral Economics may address fraud by educating consumers, and by making financial crises more salient to risk-takers.
Rethinking Fraud:
The Panel.
How may regulations based on Behavioral Economics better reduce fraud and corruption?
It has proven difficult to discern fraudulent acts from mere "sharp elbowed" business practices. Panelists cite this difficulty as a reason why fraud has been so difficult to prevent. Behavioral Economics may serve to align executives' interests with long-term gains, clarify contrary business practices as fraud, and ultimately lead to fraud's prevention.