Behavioural Economics is an elective course in Osgoode’s Professional LLM in Financial Law that examines how psychological biases shape financial decision-making and the legal frameworks that respond to it. The course focuses on areas such as borrowing, debt and bankruptcy, exploring how law and regulation can better account for how people actually behave.
The course is taught by Alexander Coutts, an Associate Professor of Economics at the Schulich School of Business. His research explores how information and motivated beliefs influence decision-making, producing patterns such as overconfidence, optimism and discrimination. Drawing on this work, he connects behavioural theory to legal and financial systems.
The course begins with an overview of behavioural economics and the key biases that affect financial decisions, including time-inconsistent preferences and the status quo bias. These concepts provide a foundation for examining how individuals navigate credit and debt and why those decisions may diverge from their long-term interests. Students then consider how creditors may take advantage of these tendencies and how this can contribute to overindebtedness.
These questions are particularly relevant in a rapidly evolving technological landscape. “Behavioural economics is more important than ever because we’re entering a new technological era with AI,” Professor Coutts says. While AI is changing how information is processed and delivered, it does not replace human judgment. “People still decide which tools to use, what to ask, how long to search and whether to trust the answers.” At the same time, he notes, firms can use these technologies to better understand and potentially influence consumer behaviour, while individuals have access to more tools to inform their decisions. “Some become more informed, others more influenced.”
A central focus of the course is how legal frameworks respond to these behavioural realities. Students examine how regulation can be designed to reduce financial harm, including through a behavioural analysis of the Bankruptcy and Insolvency Act. Rather than treating poor financial decisions as purely individual failures, the course situates them within broader systems of incentives, information and institutional design.
Because the course brings together lawyers and professionals from a range of backgrounds, discussions often reflect multiple perspectives on the same problem. “Having lawyers and non-legal professionals together leads to much richer discussions,” Professor Coutts says. Legal professionals draw on their experience in practice, while others focus more directly on incentives and outcomes. “They are less tied to a legal framing and more likely to step back and ask basic questions about behaviour.”
The course is designed to be accessible to students without formal legal training. Professor Coutts emphasizes that engaging with the material begins with understanding the problems legal systems are trying to solve. “Thinking through those trade-offs is already very useful, even without knowing the details of the law,” he says, pointing to areas such as bankruptcy, where systems must balance risk-taking with the potential for abuse.
Professor Coutts approaches these issues from the perspective of an economist. “I’m not a legal professional. I’m an economist teaching in a business school,” he says. This creates a dynamic in which students contribute legal knowledge while he provides a framework for analyzing behaviour and incentives. His research, spanning topics from cooperation to belief formation, reinforces a consistent theme: “how institutions interact with human behaviour.”
His research also informs the course’s broader outlook. Having studied topics ranging from cooperation in post-war Rwanda to belief systems and health behaviours in West Africa, Professor Coutts situates legal and economic questions within a wider context. “Across these settings, the common theme is how institutions interact with human behaviour,” he says, reinforcing the course’s emphasis on the relationship between systems and decision-making.
Classroom learning moves between theory and application. Students begin with economic models of decision-making, then introduce behavioural insights and apply them to real-world scenarios, including credit cards, payday lending, consumer protection and judicial decision-making. “The goal is to understand what is driving behaviour in each case,” Professor Coutts says. “Is it incentives, constraints, or behavioural biases?”
The course is highly discussion-based, with an emphasis on testing ideas and working through competing explanations. “It’s less about finding a single correct answer and more about understanding trade-offs and reasoning more carefully,” he says. Through this process, students refine their ability to analyze complex problems from multiple angles.
By the end of the course, students develop a more structured approach to understanding behaviour in legal and financial contexts. “For many students, the main shift is how they analyze behaviour,” Professor Coutts says. They learn to distinguish between rational responses and behavioural influences and to assess when intervention may be appropriate. “They can assess which factors matter most and whether intervention makes sense, and if so, what kind.”
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