Has Conflict of Interest Regulation Learned the Behavioural Lessons?

The paper is part of an incipient larger project to analyse the regulation of conflicts of interest from a behavioural perspective. The intuition behind this endeavour is that there is a mismatch between behavioural insights on conflicts of interest and regulations that seek to prevent or manage conflicts of interest. This presentation illustrate the analysis with one example from the Digital Services Act (DSA). In this act, independent audits play a key role as auditors are tasked with verifying compliance with substantive obligations, including the specific obligations accruing to very large players (‘Very Large Online Platforms’ and ‘Very Large Search Engines’). The DSA rules that guarantee auditors’ independence observe some basic principles of economic common sense. For example, auditors’ fees must not depend on the results of the audit. But it is less clear if these rules also take on board the relevant lessons from scholarship in judgement and decision-making or behavioural ethics. The paper offers an assessment of the mismatch between regulation and behavioural scholarship on conflict of interest and discusses if and how it could be reduced. This discussion circles back to the issue of what behavioural lessons should be incorporated into legal rules rather than (or in addition to) private orderings. The aim of this case study is also to highlight methodological questions that need attention in the context of the whole project and the conference will be a precious opportunity to discuss them with participants.