The Myth of the Rational Borrower: Rationality, Behavioralism, and the Misguided "Reform" of Bankruptcy Law.

This article examines data on the market for consumer credit and empirical studies of consumer behavior, including studies of consumers who have filed for bankruptcy. It finds that the focus on increased nonbusiness bankruptcy filing rates ignores important data that raise puzzling questions about the locus of rationality. To address this trend, the article suggests that nonstrategic borrowers must outnumber strategic borrowers.