Is Paretian liberalism still possible? Behavioral economics and liberal paternalism

The idea of liberal paternalism relies on psychological findings that humans show systematic deviations from rationality: pepole are influenced by the way a decision problem is being presented (framing), they stick dispropotionately with the status quo (status-quo-bias) and they suffer from weakness of will, leading to time-inconsistent behaviour. In contrast to traditional heavy-handed approaches to paternalism, liberal paternalistism aims to improve individual choice without restricting it by making use of some of those behavioural biasses. This policy seems to be very smart, nonetheless is brings several problems with it which are being adressed in this paper. © 2010, List-Gesellschaft e.V.