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. It will undoubtedly have far-reaching implications for many areas of legal regulation . In author’s opinion, private law institutions aimed at regulating relations between business and customers will be the first to deal with transformation. The paper outlines the main questions and issues that 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 addressing these issues. In the beginning 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 discretionary rules and information disclosure for “pushing” individuals to a more rational behaviour. The author then analyses how the current level of Big Data collection, processing and use can affect the discretionary rules and information disclosure in corporate contracts with consumers, including the possibility of private law institution “personalisation” with account of the individual features of the parties to the transactions. Further on, the asks and attempts to answer the key question of the article: What regulatory environment should be in place to enable behaviourally informed personalisation of private law institutions 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: How to ensure freedom of choice and autonomy of will of individuals while using information and behavioural innovations? How much information should legal actors be able to receive in order to make the best decision? How to find a balance between private law “personalisation” and personal data protection? In conclusion, the author summarises the results of the study and concludes that to date there are no universal rules and algorithms for private law personalisation, and the introduction of Data Science and behavioural economics into law is still taking place in individual legal relations on case-by-case basis.