Abstract
In stark contrast with academic works, there are only a few cases where behavioural economics (BE) is applied to institutional design in the policy arena, although the potential of its applicability is huge, particularly in the area of benign paternalism including. The structural factors that do at present and/or could in the future prevent BE from being used in the policy discussion include (i) the very nature of BE that it is not so much normative as positive, (ii) the government failure in that policymakers as well as consumers suffer from psychological biases, (iii) moral issuesarising when policymakers use or even exploitconsumers’ biases, and (iv) the innate diversity and context-dependency of behavioural patterns which would make parsimonious analysis difficult. The above argument implies the importance of applying BE to policy making in a deliberate and incremental manner.
