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This volume of collected essays explores the most relevant developments at the interface of economics and psychology, with special attention to models of irrational behavior, and draws the relevant implications of such models for the design of legal rules and institutions. The application of economic models of irrational behavior to law is especially challenging because specific departures from rational behavior differ markedly from one another. Furthermore, the analytical and deductive instruments of economic theory have to be reshaped to deal with the fragmented and heterogeneous findings of psychological research, lurning towards a more experimental and inductive methodology. This volume brings together scholars who are pioneering in this area, with a presentation of some of the most exciting developments in the field of legal and economic theory. Areas of application include criminal law and sentencing, tort law, contract law, corporate law, and financial markets.