Article

The Meaning of Probability Judgments: An Essay on the Use and Misuse of Behavioral Economics

In this essay, Professor Yablon challenges the assumption that behavioral heuristics—such as the availability heuristic—constitute “biases” that necessarily lead to errors in probability judgments. He notes that there are many different concepts of probability and, in many contexts, no agreed-upon method for determining the correctness of inconsistent probability judgments. Yet many legal academics and policymakers ig-nore these complex aspects of probability theory, assuming that statistical or frequentist probabilities are always to be preferred over subjective judgments of probability.Professor Yablon argues that choosing between frequentist and subjective approaches to probability judgments in policymaking can only be done with great sensitivity to context and the quality of the information availa-ble. He provides examples of current policy debates where statistical probability is to be preferred, such as environmental protection, others where subjective probability judgments are preferable, such as settlement of litigation, and a third important category, including products liability, where neither approach is clearly superior.

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