Sunstein and Thaler’s nudge theory, the steering of people’s behavior by means of default or opt-out rules, and the promotion of a ‘mild’ or ‘libertarian’ paternalism
Pursuant to the nudge theory of Sunstein and Thaler, instead of teaching people to overcome their inertia and avoid its sometimes significant ramifications, the regulator could exploit this inertia in a positive and benevolent way by establishing default rules or options that improve individual well-being and societal welfare. The reshaping of the content of the default is what Sunstein and Thaler mean by the term ‘nudge.’ Nonetheless, the ‘libertarian’ paternalism advocated by them encounters some considerable objections. I carefully examine these objections and, up to a point, refute them. I further articulate a set of criteria one may use to test the acceptability of a nudge that aims to defeat or limit systematic biases of individuals. Apart from the nudge theory, I also examine a recent general trend toward personalizing private law: namely, on the basis of the findings of behavioral economics and big data analytics, there is an attempt to personalize private law across different regulatory tools, such as disclosures, defaults, and mandates.