Fiduciary Disclosure and Informed Consent: A Behavioural Law and Economics Approach

Remus Valsan (University of Edinburgh)

Abstract

This paper contributes to the existing law and economics literature of fiduciary duties in two ways. First, it brings clarity to the existing theoretical framework, by mapping out the current contractarian, anti-contractarian and behavioural strands of research. Second, the paper uses the behavioural law and economics framework to revisit the issue of risk allocation in a fiduciary relationship following disclosure of a conflict of interest. It emphasises the shortcomings of disclosure and informed consent in mitigating the additional risk of unreliable exercise of discretion, and makes the case for an enhanced duty of care post disclosure.

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