2005 Lewis & Clark Law School Eleventh Annual Business Law Forum:

Behavioral Analysis of Corporate Law: Instruction or Distraction?

Economic analysis has dominated corporate law for forty years. The application of rational choice theory to matters of corporate law, corporate governance, securities regulation and finance has proved remarkably successful and robust. In recent years, however, proponents of behavioral economics have challenged traditional economic theory and, citing empirical studies, have argued that the rational choice model fails accurately to describe human behavior. Perhaps more importantly, scholars of behavioral economics contend that certain systematic deviations from rational choice's predictions can be (and have been) identified, suggesting the existence of a better predictive model.

Numerous articles, appearing in both legal and economic journals, have applied or challenged the application of behavioral analysis to myriad aspects of corporate governance and its regulation. While the debate continues to rage, it is time to take stock of the state of behavioral
analysis of corporate law-has it proved instructive, or is it merely a distraction from the still-reigning traditional paradigm?

This topic is of great scholarly interest, and the questions concerning the validity, predictive power and scope of behavioral analysis constitute some of the central disputes in modern corporate law and economics. This topic should also be of significant intellectual interest to the corporate legal community, as the outcomes of these debates will ultimately shape both corporate regulation and its judicial interpretation.

Conference Planners:

Professor Jennifer Johnson

Professor Geoffrey Manne

Forum Sponsor:

Miller Nash LLP