Richard Epstein: The False Allure Of Libertarian Paternalism

One of the great academic debates of our time revolves around how people make choices. On the one side, neoclassical theory assumes that individuals generally act in sensible ways in order to advance their individual self-interest. They are motivated to control aggression and monopoly, and to let private parties in competitive markets strike what bargains they like. 

In recent years, this neoclassical approach has come under attack from the field of behavioral economics. Its proponents argue that the neoclassical model of behavior, premised on the fact that human beings are rational decision-makers, does not sufficiently account for the many false heuristics and biases that lead people astray as they make decisions.