Paper. RIA and Behavioural Research: a New Perspective?

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I paper dell’Osservatorio AIR (ISSN 2280-8698), December 2014, P 4/2014

Luca Di Donato

Regulatory Impact Assessment (RIA) and Behavioural Research: a New Perspective?

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Introduction

This essay will try to answer the following question: how the findings of the behavioural sciences can improve the quality of regulation?

The first part attempts to retrace the meaning of regulatory quality through its development in European Union Law: as a whole, on the base of directives, communications and reports, this
principle is related both to companies’ needs as well as to the economic environments in which business operators operate. According to scholars, regulators should also focus on good regulation
starting from the point of view of the people.

A new area of research indicates that regulation risks being poor, weak and ineffective if legislators do not reflect on how people really react, but rather only presume to know their reactions.
From this perspective, governments should recognise that individuals can assume unexpected behaviour or have other limitations; in other words, people have «limits and errors».

The second part of this essay explains how the homo oeconomicus theory – according to which people always pursue their own economic interest in a rational way – might be limited.
Cognitive science has shown that people are not always rational and are subject to recurring cognitive biases in decision-making: people choose status quo for inertia or procrastination; people
can be influenced by how data and information are presented and organized; individual behaviour is greatly influenced by the perceived behaviour of other people.

The third part of the paper attempts to describe how these new behaviourally-informed regulatory approaches can be integrated into regulatory process. Within the cycle of regulation, the
paper focuses on consultation and Regulatory Impact Assessment’s (hereafter: RIA) roles in order to gather real information from stakeholders and to bring out limitations and unexpected behaviour.

In this analysis, the essay reports the U.S. case in which agencies have adopted the behavioural approach or, more precisely, an “empirically informed” regulation to face some human behaviour limitations. American agencies use some regulatory tools, such as disclosure, to organize the framing of information in a way which is clear and simple. However, when legislators or decision-makers do not use regulatory tools, they can still use a kind of regulation integrated with a behavioural approach: the nudge regulation. This essay explains the nudge regulation in which a regulator, but not only, becomes a choice architect that utilises nudges to organize the citizens’ decision-making contexts. According to authors of nudging theory, a nudge can be well-represented by “a series of white stripes painted onto the road” that is able to advise the drivers to slow down and, in this way reducing the individual and social costs of accidents.

Finally, the paper provides some nudge experiences by governments and private entities, it seeks to raise some questions about this theory, such as: competences required, limited freedom of endusers,
the difficulty in defining a nudge precisely and so on.

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Luca Di Donato, laureato in Scienze politiche presso l’Università Luiss Guido Carli, attualmente dottorando di ricerca in “Diritto ed Impresa” alla Luiss e collaboratore presso il Centro di ricerca Vittorio Bachelet. Fa parte del Comitato di redazione della rivista Concorrenza e Mercato ed è membro del Graduate Student Network dell’ECPR.

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