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Key Issues of Private Law Transformation under Influence of Behavioural Economics and Data Science
Corporations are now increasingly embracing the advances of Data Science and behavioural economics. This will undoubtedly have far-reaching implications for many areas of legal regulation and practice. The author believes that private law aimed at regulating relations between business and consumers will be the first to deal with the transformation. This article outlines the main issues lawyers will face in the next five to ten years as the ideas of behavioural economy and Data Science spread to private law, and offers some thoughts on addressing these issues. To begin with, the author briefly reviews the progress of behavioural economy and how its achievements help to attain the aims of legal regulation. In particular, the author surveys private law tools such as default rules and information disclosures for “nudging” individuals to more rational behaviour. The author then analyses how the current level of Big Data collection and processing can affect the default rules and information disclosures in corporate contracts with consumers, including the possibility of private law “personalisation” based on the individual features of the parties to the transactions. Furthermore, the article attempts to answer the key question: What regulatory environment should be in place to enable behaviourally informed personalisation of private law by using Big Data? In responding to this question, the author analyses three related problems arising at the intersection of law, Data Science, psychology, and economics: 1) How do we ensure freedom of choice and autonomy of will of individuals while using digital and behavioural innovations? 2) How much information should customers be provided with in order to make optimal decisions? 3) How do we find a balance between private law “personalisation” and personal data protection? In conclusion, the author summarises the results of the study and concludes that there e no universal rules and algorithms for private law personalisation, and that the introduction of Data Science and behavioural economics into private law is still taking place on a case by case basis