Hostname: page-component-586b7cd67f-2plfb Total loading time: 0 Render date: 2024-11-30T15:06:35.489Z Has data issue: false hasContentIssue false
  • English
  • Français

Do People Like Mandatory Rules? The Impact of Framing and Phrasing

Published online by Cambridge University Press:  12 May 2020

Eyal Zamir  and
Ori Katz
Get access Rights & Permissions [Opens in a new window]

Abstract

Market regulation has traditionally focused on disclosure duties, yet mounting evidence questions their effectiveness. The efficacy of nudges is similarly doubted, especially when suppliers counter their effects. Consequently, there is growing interest in mandatory regulation of the content of contracts. Previous studies have examined public opinion about nudges but not about mandatory rules.

We explore how the formulation of mandatory rules might affect their judged desirability, focusing on the choices: (1) between negative and positive formulation; and (2) between merely establishing substantive mandatory rules and supervising the wording of the contract as well. We also examine laypersons’ general attitude toward mandatory rules.

We report the results of four studies, conducted with a representative sample of 968 US adults and 795 MTurk master workers. Contrary to our conjecture, we found that subjects generally judged wording rules as more desirable than merely substantive ones, and positive rules as more desirable than negative ones. There also appears to be strong support for pro-customer mandatory rules, even among conservative people. These results arguably legitimize more, and more effective, mandatory rules. They also suggest that the relative paucity of mandatory rules in US law is not due to public opposition to them but to other reasons.

Type
Articles
Information
Law & Social Inquiry , Volume 45 , Issue 4 , November 2020 , pp. 1052 - 1092
Copyright
© 2020 American Bar Foundation

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The authors contributed equally and are listed in random order.

For helpful comments on previous drafts we are grateful to Yehonatan Givati, David Hoffman, Russell Korobkin, Eyal Peer, Yuval Procaccia, Roi Yair, the participants in the conference on Behavioral Legal Studies: Cognition, Motivation and Moral Judgements (Jerusalem, 2019), the Annual Conference of the European Association of Law and Economics (Tel Aviv, 2019), and three anonymous referees. This research was supported by the I-CORE Program of the Planning and Budgeting Committee and the Israel Science Foundation (Grant No. 1821/12) and the Aharon Barak Center for Interdisciplinary Legal Research.

References

References

Anderson, Annie P. “Why Anti-Surcharge Laws Do Not Violate a Merchant’s Freedom of Speech.”American University Law Review 66, no. 6 (2017): 1459–93.Google Scholar
Arad, Ayala, and Rubinstein, Ariel. “The People’s Perspective on Libertarian-Paternalistic Policies.”Journal of Law and Economics 61, no. 2 (2018): 311–33.CrossRefGoogle Scholar
Ayres, Ian, and Schwartz, Alan. “The No-Reading Problem in Consumer Law.” Stanford Law Review 66, no. 3 (2014): 545–609.Google Scholar
Baker, Tom, and Logue, Kyle D.. “Mandatory Rules and Default Rules in Insurance Contracts.” In Research Handbook on the Economics of Insurance Law. Edited by Schwarcz, Daniel and Siegelman, Peter, 377–412. Cheltenham, UK: Edward Elgar Publishing, 2015.CrossRefGoogle Scholar
Bakos, Yannis, Marotta-Wurgler, Florencia, and Trossen, David R.. “Does Anyone Read the Fine Print? Consumer Attention to Standard-Form Contracts.” Journal of Legal Studies 43, no. 1 (2014): 1–35.CrossRefGoogle Scholar
Bar-Gill, Oren, and Ben-Shahar, Omri. “Regulatory Techniques in Consumer Protection: A Critique of European Consumer Contract Law.” Common Market Law Review 50, nos. 1/2 (2013): 109–26.Google Scholar
Bar-Gill, Oren, and Bubb, Ryan. “Credit Card Pricing: The Card Act and Beyond.” Cornell Law Review 97, no. 5 (2012): 967–1018.Google Scholar
Bar-Gill, Oren, and Warren, Elizabeth. “Making Credit Safer.” University of Pennsylvania Law Review 157, no. 1 (2008): 1–101.Google Scholar
Barr, Michael S., Mullainathan, Sendhil, and Shafir, Eldar. “The Case for Behaviorally Informed Regulation.” In New Perspectives on Regulation. Edited by Moss, David and Cisternino, John, 25–61. Cambridge, MA: The Tobin Project, 2009.Google Scholar
Bartels, Larry M. Unequal Democracy: The Political Economy of the New Gilded Age. 2nd ed. Princeton, NJ: Princeton University Press, 2016.Google Scholar
Bates, Larry. “Administrative Regulation of Terms in Form Contracts: A Comparative Analysis of Consumer Protection.” Emory International Law Review 16, no. 1 (2002): 1–106.Google Scholar
Bebchuk, Lucian A., and Posner, Richard A.. “One-Sided Contracts in Competitive Consumer Markets.” Michigan Law Review 104, no. 5 (2006): 827–35.Google Scholar
Ben-Shahar, Omri, and Schneider, Carl. More than You Wanted to Know: The Failure of Mandated Disclosure. Princeton, NJ: Princeton University Press, 2014.Google Scholar
Bentley, Allen R. “An Alternative Residential Lease.” Columbia Law Review 74, no. 5 (1974): 836–83.CrossRefGoogle Scholar
Berinsky, Adam J., Huber, Gregory A., and Lenz, Gabriel S.. “Evaluating Online Labor Markets for Experimental Research: Amazon.com’s Mechanical Turk.” Political Analysis 20, no. 3 (2012): 351–68.CrossRefGoogle Scholar
Berlin, Isaiah. “Two Concepts of Liberty,” in Four Essays on Liberty, 118–72. Oxford: Oxford University Press, 1969.Google Scholar
Botero, Juan C., Djankov, Simeon, La Porta, Rafael, Lopez-de-Silanes, Florencio, and Shleifer, Andrei. “The Regulation of Labor.” Quarterly Journal of Economics 119, no. 4 (2004): 1339–82.CrossRefGoogle Scholar
Bubb, Ryan, and Pildes, Richard H.. “How Behavioral Economics Trims Its Sails and Why.” Harvard Law Review 127, no. 6 (2014): 1593–678.Google Scholar
Campbell, Donald E. “Forty (Plus) Years After the Revolution: Observations on the Implied Warranty of Habitability.” University of Arkansas at Little Rock Law Review 35, no. 4 (2013): 793–837.Google Scholar
Carter, Carolyn L., Van Alst, Jon W., and Sheldon, Jonathon. Consumer Warranty Law: Lemon Law, Magnuson-Moss, UCC, Manufactured Home, and Other Warranty Statutes 5th ed. Boston: National Consumer Law Center, 2015.Google Scholar
Carter, Ian. “Positive and Negative Liberty.” In Stanford Encyclopedia of Philosophy. Rev. ed. 2016. https://plato.stanford.edu/entries/liberty-positive-negative.Google Scholar
Chandler, Jesse, Sisso, Itay, and Shapiro, Danielle. “The Impact of Carelessness and Fraud on The Study of Rare Clinical Groups Online.” Journal of Abnormal Psychology (forthcoming).Google Scholar
Christensen, Ken Ramshøj. “Negative and Affirmative Sentences Increase Activation in Different Areas in the Brain.” Journal of Neurolinguistics 22, no. 1 (2009): 1–17.CrossRefGoogle Scholar
Dogruel, Leyla. “Privacy Nudges as Policy Interventions: Comparing US and German Media Users’ Evaluation of Information Privacy Nudges.” Information, Communication, and Society 22, no. 8 (2019): 1080–95.CrossRefGoogle Scholar
Franzese, Paula A., Gorin, Abbott, and Guzik, David J.. “The Implied Warranty of Habitability Lives: Making Real the Promise of Landlord-Tenant Reform.” Rutgers Law Review 69, no. 1 (2016): 1–45.Google Scholar
Furth-Matzkin, Meirav. “On the Unexpected Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market.” Journal of Legal Analysis 9, no. 1 (2017): 1–49.CrossRefGoogle Scholar
Furth-Matzkin, Meirav “The Harmful Effects of Unenforceable Contract Terms: Experimental Evidence.” Alabama Law Review 70, no. 4 (2019): 1031–72.Google Scholar
Gilens, Martin, and Page, Benjamin I.. “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.” Perspectives on Politics 12, no. 3 (2014): 564–81.CrossRefGoogle Scholar
Gough, Philip B. “Grammatical Transformations and Speed of Understanding.” Journal of Verbal Learning and Verbal Behavior 4, no. 2 (1965): 107–11.CrossRefGoogle Scholar
Greenwald, Anthony G., and Banaji, Mahzarin R.. “Implicit Social Cognition: Attitudes, Self-Esteem, and Stereotypes.” Psychological Review 102, no. 1 (1995): 4–27.CrossRefGoogle ScholarPubMed
Hagman, William, Andersson, David, Västfjäll, Daniel, and Tinghög, Gustav. “Public Views on Policies Involving Nudges.” Review of Philosophy and Psychology 6, no. 3 (2015): 439–53.CrossRefGoogle Scholar
Hasson, Uri, and Glucksberg, Sam. “Does Understanding Negation Entail Affirmation? An Examination of Negated Metaphors.” Journal of Pragmatics 38, no. 7 (2006): 1015–32.CrossRefGoogle Scholar
Hausman, Daniel M., and Welch, Brynn. “Debate: to Nudge or Not to Nudge.” Journal of Political Philosophy 18, no. 1 (2010): 123–36.CrossRefGoogle Scholar
Hoffman, David, and Strezhnev, Anton. “Mapping the Contracts of the Dispossessed” Working paper, n.d. Google Scholar
Hsee, Christopher K., Loewenstein, George F., Blount, Sally, and Bazerman, Max H.. “Preference Reversals Between Joint and Separate Evaluation of Options: A Review and Theoretical Analysis.” Psychological Bulletin 125, no. 5 (1999): 576–90.CrossRefGoogle Scholar
Huang, Yan. “Implicature.” In The Oxford Handbook of Pragmatics. Edited by Huang, Yan, 155–79. Oxford: Oxford University Press, 2017.Google Scholar
Huff, Connor, and Tingley, Dustin. “‘Who Are These People?’ Evaluating the Demographic Characteristics and Political Preferences of MTurk Survey Respondents.” Research and Politics 2, no. 3 (2015):1–12.CrossRefGoogle Scholar
Irvine, Krin, Hoffman, David A., and Wilkinson-Ryan, Tess. “Law and Psychology Grows Up, Goes Online, and Replicates.” Journal of Empirical Legal Studies 15, no. 2 (2018): 320–55.CrossRefGoogle Scholar
Jung, Janice Y., and Mellers, Barbara A.. “American Attitudes toward Nudges.” Judgment and Decision Making 11, no. 1 (2016): 62–74.Google Scholar
Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.Google Scholar
Klick, Jonathan, and Mitchell, Gregory. “Government Regulation of Irrationality: Moral and Cognitive Hazards.” Minnesota Law Review 90, no. 6 (2006): 1620–63.Google Scholar
Kuklin, Bailey. “On the Knowing Inclusion of Unenforceable Contract and Lease Terms.” University of Cincinnati Law Review 56, no. 3 (1988): 845–918.Google Scholar
Lessig, Lawrence. Republic, Lost: How Money Corrupts Congress–and a Plan to Stop It. New York: Twelve, 2011.Google Scholar
Marotta-Wurgler, Florencia.“What’s in a Standard Form Contract? An Empirical Analysis of Software License Agreements.” Journal of Empirical Legal Studies 4, no. 4 (2007): 677–713.CrossRefGoogle Scholar
Marotta-Wurgler, Florencia “Competition and the Quality of Standard Form Contracts: A Test Using Software License Agreements.” Journal of Empirical Legal Studies 5, no. 3 (2008):447–75.CrossRefGoogle Scholar
Marotta-Wurgler, Florencia“Will Increased Disclosure Help? Evaluating the Recommendations of the ALI’s ‘Principles of the Law of Software Contracts’.” University of Chicago Law Review 78, no. 1 (2011):165–86.Google Scholar
Mueller, Warren. “Residential Tenants and Their Leases: An Empirical Study.” Michigan Law Review. 69, no. 2 (1970):247–98.CrossRefGoogle Scholar
Mullinix, Kevin J., Leeper, Thomas J., Druckman, James N., and Freese, Jeremy. “The Generalizability of Survey Experiments.” Journal of Experimental Political Science 2, no. 2 (2015):109–38.CrossRefGoogle Scholar
Nisbett, Richard E., and DeCamp Wilson, Timothy. “The Halo Effect: Evidence for Unconscious Alteration of Judgments.” Journal of Personality and Social Psychology 35, no. 4 (1977):250–56.CrossRefGoogle Scholar
Olafsen, Kurt E. “Preventing the Use of Unenforceable Provisions in Residential Leases.” Cornell Law Review 64, no. 3 (1979):522–37.Google Scholar
Ophir, Yaakov, Sisso, Itay, Asterhan, Christa S.C., Tikochinski, Refael, and Reichart, Roi. “The Turker Blues: Hidden Factors Behind Increased Depression Rates Among Amazon’s Mechanical Turkers.” Clinical Psychological Science (2019).Google Scholar
Peer, Eyal, Vosgerau, Joachim, and Acquisti, Alessandro. “Reputation as a Sufficient Condition for Data Quality on Amazon Mechanical Turk.” Behavior Research Methods 46, no. 4 (2014):1023–31.CrossRefGoogle ScholarPubMed
Prims, J. P., Sisso, Itai, and Bai, Hui. “Suspicious IP Online Flagging Tool.” Retrieved from https://itaysisso.shinyapps.io/Bots, 2018.Google Scholar
Radin, Margaret Jane. Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law. Princeton, NJ: Princeton University Press, 2013.CrossRefGoogle Scholar
Rehfeld, Andrew. “Representation Rethought, On Trustees, Delegates, and Gyroscopes in the Study of Political Representation and Democracy.” American Political Science Review 103, no. 2 (2009):214–30.CrossRefGoogle Scholar
Reisch, Lucia A., and Sunstein, Cass R.. “Do Europeans Like Nudges?” Journal of Judgment and Decision Making 11, no. 4 (2016):310–25.Google Scholar
Ritov, Ilana, and Baron, Jonathan. “Reluctance to Vaccinate: Omission Bias and Ambiguity.” Journal of Behavioral Decision Making 3, no. 4 (1990):263–77.CrossRefGoogle Scholar
Schlozman, Kay Lehman, Verba, Sidney, and Brady, Henry E.. The Unheavenly Chorus: Unequal Political Voice and the Broken Promise of American Democracy. Princeton, NJ: Princeton University Press, 2012.Google Scholar
Schwarcz, Daniel. “Reevaluating Standardized Insurance Policies.” University of Chicago Law Review 78, no. 4 (2011):1263–348.Google Scholar
Schwarz, Norbert. “Metacognitive Experiences in Consumer Judgment and Decision Making.” Journal of Consumer Psychology 14, no. 4 (2004):332–48.CrossRefGoogle Scholar
Shanor, Amanda. “The New Lochner.” Wisconsin Law Review 2016, no. 2:133–208.Google Scholar
Sovern, Jeff. “Toward a Theory of Warranties in Sales of New Homes: Housing the Implied Warranty Advocates, Law and Economics Mavens, and Consumer Psychologists under One Roof.” Wisconsin Law Review 1993, no. 1:13–103.Google Scholar
Steinbock, Bonnie, and Norcross, Alastair (editors). Killing and Letting Die. 2 nd ed. New York: Fordham University Press, 1994.Google Scholar
Stolle, Dennis P., and Slain, Andrew J.. “Standard Form Contracts and Contract Schemas: A Preliminary Investigation of the Effects of Exculpatory Clauses on Consumers’ Propensity to Sue.” Behavioral Science and Law 15, no. 1 (1997):83–94.3.0.CO;2-F>CrossRefGoogle Scholar
Sullivan, Charles A. “The Puzzling Persistence of Unenforceable Contract Terms.” Ohio State Law Journal 70, no. 5 (2009):1127–77.Google Scholar
Sunstein, Cass R., “Nudges.Gov: Behaviorally Informed Regulation.” In The Oxford Handbook of Behavioral Economics and the Law. Edited by Zamir, Eyal and Teichman, Doron, 719–47. New York: Oxford University Press, 2014.Google Scholar
Sunstein, Cass R.. “Do People Like Nudges?” Administrative Law Review 68, no. 2 (2016):177–210.Google Scholar
Sunstein, Cass R., and Thaler, Richard H.. “Libertarian Paternalism Is Not an Oxymoron.” University of Chicago Law Review 70, no. 4 (2003):1159–202.CrossRefGoogle Scholar
Super, David A. “The Rise and Fall of the Implied Warranty of Habitability.” California Law Review 99, no. 2 (2011):389–463.Google Scholar
“Symposium: How Law Works.” Law and Social Inquiry 42, no. 1 (2017):4–99.CrossRefGoogle Scholar
Tennenbaum, David, Fox, Craig R., and Rogers, Todd. “On the Misplaced Politics of Behavioral Policy Interventions.” Nature Human Behavior 1 (2017): Article no. 0130.CrossRefGoogle Scholar
Thaler, Richard H., and Sunstein, Cass R.. Nudge: Improving Decisions about Health, Wealth, and Happiness. Rev. ed. New York: Penguin Books, 2009.Google Scholar
Thorndike, Edward L. “A Constant Error in Psychological Ratings.” Journal of Applied Psychology 4, no. 1 (1920):25–29.CrossRefGoogle Scholar
Tucker, Robert L. “Disappearing Ink: The Emerging Duty to Remove Invalid Policy Provisions.” Akron Law Review 42, no. 2 (2015):519–605.Google Scholar
Wason, Peter C. “The Processing of Positive and Negative Information.” Quarterly Journal of Experimental Psychology 11, no. 2 (1959):92–107.CrossRefGoogle Scholar
Wilkinson-Ryan, Tess. “A Psychological Account of Consent to Fine Print.” Iowa Law Review 99, no. 4 (2014):1745–84.Google Scholar
Willis, Lauren E. “Decisionmaking and the Limits of Disclosure: The Problem of Predatory Lending: Price.” Maryland Law Review 65, no. 3 (2006):707–840.Google Scholar
Willis, Lauren E. “When Nudges Fail: Slippery Defaults.” University of Chicago Law Review 80, no. 3 (2013):1155–229.Google Scholar
Zamir, Eyal. Law, Psychology, and Morality: The Role of Loss Aversion. New York: Oxford University Press, 2015.Google Scholar
Zamir, Eyal, and Ayres, Ian. “A Theory of Mandatory Rules: Typology, Policy, and Design.” Texas Law Review 99 (forthcoming).Google Scholar
Zamir, Eyal, and Katz, Ori. “Substituting Invalid Contract Terms: Theory and Preliminary Empirical Findings.” Working Paper, n.d. =https://ssrn.com/abstract=3457893.Google Scholar
Zamir, Eyal, and Teichman, Doron. Behavioral Law and Economics. New York: Oxford University Press, 2018.CrossRefGoogle Scholar

Statutes Cited

Ala. Code § 5-18-9 (2018).Google Scholar
Cal. Civ. Code § 1670.8, § 1812.408 (2018).Google Scholar
940 Code Mass. Regs. § 3.17(3).Google Scholar
Credit Card Accountability, Responsibility, and Disclosure Act of 2009, Pub. L. No. 111-24, 123 Stat. 1734 (2009).Google Scholar
German Civil Code, Bürgerliches Gesetzbuch, §§ 305–10.Google Scholar
Israeli Standard Contracts Law 1982.Google Scholar
Mass. Gen. Laws ch. 93A §4.Google Scholar
New York Warranties on Sales of New Homes Act of 1988, N.Y. Gen. Bus. Law §§ 777–777-b; Sovern 1993.Google Scholar
New York Insurance Law, §§ 3412(g), 3215(d).Google Scholar
The European Directive 93/13/EEC on Unfair Terms in Consumer Contracts (1993).Google Scholar
The German Standard Contracts Act (Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen) of 1976.Google Scholar
15 U.S.C. § 1639c(c).Google Scholar
UCC §§ 2–302(1), 2–316.Google Scholar