One of the premises of the way in which markets are analysed is that people make rational choices. Nobody’s ever really believed this premise but it was for long considered a workable assumption. More recent work in behavioural economics suggests that absence of rationality can be analysed more systematically, and has led some to take the view that you can regulate based on the assumption of irrationality.
Sunstein ‘The Storrs Lectures: Behavioral Paternalism’ 122 Yale Law Journal 1826 (2013)
Joshua D. Wright & Douglas H. Ginsburg ‘Behavioral Law and Economics: Its Origins, Fatal Flaws, and Implications for Liberty’ (2012) 106 Northwestern University Law Review 1033 (2012)
Baldwin ‘From regulation to Behaviour Change: Giving Nudge the Third degree’ (2014) 77(6) Modern Law Review 831