It is often assumed that behavioural economics justifies more intrusive regulation of markets, because people are not fully rational and need to be protected from their quirks. The speaker challenges that assumption.
Firstly, insofar as people can be helped to make better choices, that goal can usually be achieved through light-touch regulations.
Secondly, faulty perceptions about markets in general seem to be best corrected through market-based solutions.
Thirdly, increasing regulation does not seem to solve problems caused by lack of market discipline, pricing inefficiencies and financial innovation; in fact better results might be achieved through simpler rules.
Fourthly, regulatory rule-makers are subject to imperfect rationality, which tends to reduce the quality of regulatory intervention.
Finally, regulatory complexity seems to exacerbate the harmful effects of limited rationality, while simple rules have positive learning effects on market participants.
Oskari Juurikkala is a researcher at the Institute of International Economic Law (KATTI), University of Helsinki. He is currently writing his doctoral dissertation on the regulation of financial markets.
A graduate in both law (London School of Economics) and economics (Helsinki School of Economics), Juurikkala has published on a range of topics including law and social norms, regulation of financial derivatives, venture capital, philosophy of economics, and legal philosophy. He has also written a monograph on pension reform, entitled Pensions, Population, and Prosperity (Acton Institute, 2007).
Before starting his doctoral thesis, Juurikkala was a researcher at the Institute of Economic Affairs in London. In the academia he has taught various courses, including Economics and Politics of European Integration (University of Helsinki), Law and Economics (University of Helsinki), Intermediate Microeconomics (Hanken School of Economics), and Business Ethics (Helsinki School of Economics). Juurikkala is also a consultant with the leadership training company Providentia.