At The Regulatory Review, Prof. Tess Wilkinson-Ryan L’05, G’06, PhD’08 discusses the role of human psychology in legal and regulatory systems.
The Regulatory Review recently featured Tess Wilkinson-Ryan L’05, G’06, PhD’08, Professor of Law and Psychology, in the publication’s Sunday Spotlight on regulatory thinkers and leaders.
Wilkinson-Ryan studies the psychology of legal decision-making. Her research addresses the role of moral judgment in legal decision-making, with a particular focus on private contracts and negotiations.
In her book, Fool Proof: How Fear of Playing the Sucker Shapes Our Selves and the Social Order — and What We Can Do About It, which she discusses in the above video, she examines how fear of playing the fool as a universal psychological phenomenon and an underappreciated driver of human behavior.
Drawing on studies in psychology, sociology, and economics, Fool Proof shows how “the sucker” construct shapes, and distorts, human decision-making in contexts ranging from personal choices to cultural conflict — and how the threat of being suckered is deployed to perpetuate social and economic hierarchies.
From The Regulatory Review:
Decision-making is a critical component of everyday life. When making choices—both large and small—innumerable considerations come into play. Wilkinson-Ryan analyzes these considerations through the lens of human psychology.
In this Spotlight, she shares her perspectives on how fear, in particular, shapes our social, legal, and regulatory worlds. She also considers how current legal and regulatory systems could improve through policies that acknowledge decision-making pathways….
TRR: In addition to studying and teaching law, you have an extensive background in psychology. Does the regulatory field currently incorporate human psychology to a sufficient degree? What might a legal and regulatory system that better fits with human psychology look like?
One of the biggest dilemmas for the psychology of regulation lies with disclosure rules. Disclosure has real normative appeal because it ostensibly makes individuals able to make better, and more informed choices, without being too heavy handed about what they can and cannot choose.
The problem is that conveying information is really hard. Sometimes, the meaning that ordinary people will derive is actually counterproductive from the perspective of the policymakers.
To take an example close to my heart: Disclosing the cost of the funds in a retirement account makes lots of sense—people need to know the cost of things. But most people have no easy way to conceptualize the difference between a fund with a fee ratio of .1 percent versus one with 1.8 percent. Those are both really small numbers!
My colleague [Saul A. Fox Distinguished Professor of Business Law] Jill Fisch and I ran a study that tried to make fund disclosures more effective by layering on another disclosure about the importance of fund fees for returns over time. The additional disclosure seemed to steer people away from high-fee funds. But the study suggested that a lot of people who would select expensive retirement funds—thus forgoing a lot of money at retirement—didn’t know what to do with the fee information disclosed to them. In fact, I think seeing the little fractional percentages actually made it seem like fees could safely be ignored. I really do think a lot of disclosures are either useless or actively doing harm… .
The Regulatory Review is a daily online publication that provides accessible coverage of regulatory policymaking and enforcement issues across a full range of regulatory topics and from a variety of perspectives.
Launched in 2009 and operating under the guidance of Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science, The Review is edited by students at Penn Carey Law. It is part of the overarching teaching, research, and outreach mission of the Penn Program on Regulation (PPR), which draws together more than 60 faculty from across the University of Pennsylvania.
Read the Wilkinson-Ryan’s full interview at The Regulatory Review.