Are “Pay Now, Terms Later” Contracts Worse for Buyers? Evidence from Software License Agreements

Marotta‐Wurgler, Florencia

doi:10.1086/596040

Cited by 41 publications

(17 citation statements)

References 18 publications

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“…Many disclosers are none of these things, many disclosers have good reasons to behave well, and many disclosers dutifully obey mandates. 181 Furthermore, even scrupulous disclosers may resist mandates for understandable, sensible, and even admirable reasons. For example, a disclosure mandate is often one of many commands, incentives, and pressures.…”

Section: Resisting the Mandatementioning

confidence: 99%

The Failure of Mandated Disclosure

Ben-Shahar¹,

Schneider²

2014

More Than You Wanted to Know

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This article explores the spectacular prevalence, and failure, of the single most common technique for protecting personal autonomy in modern society: mandated disclosure. The article has four sections: (1) A comprehensive summary of the recurring use of mandated disclosures, in many forms and circumstances, in the areas of consumer and borrower protection, patient informed consent, contract formation, and constitutional rights; (2) A survey of the empirical literature documenting the failure of the mandated disclosure regime in informing people and in improving their decisions; (3) An account of the multitude of reasons mandated disclosures fail, focusing on the political dynamics underlying the enactments of these mandates, the incentives of disclosers to carry them out, and, most importantly, on the ability of disclosees to use them; (4) An argument that mandated disclosure not only fails to achieve its stated goal but also leads to unintended consequences that often harm the very people it intends to serve.

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Section: Resisting the Mandatementioning

confidence: 99%

The Failure of Mandated Disclosure

Ben-Shahar¹,

Schneider²

2014

More Than You Wanted to Know

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“…Recently, Marotta-Wurgler (2008, 2009) has examined the relative quality of software license agreements of the sellers who disclose the terms before sale to of those who do not. She finds that there does not seem to be any systematic difference between the two in general, and when there is, the terms of the seller who do not disclose seem to be better.…”

Section: Introductionmentioning

confidence: 99%

Shrink-Wraps: Who Should Bear the Cost of Communicating Mass-Market Contract Terms?

Che

Choi

2009

SSRN Journal

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The paper examines the equilibrium quality of mass market contract terms, such as those in end user license agreements, when consumers can read and search for a better set of terms. Firms compete over price and quality of the terms. They can also choose to disclose (speak) the terms to consumers at cost. While all consumers must incur positive search (reading) cost to understand the terms, not everyone cares about the terms equally and they can also buy without reading. The paper examines two legal regimes: one that imposes a duty to read on the consumers and the other that imposes a duty to speak (disclose) on the firms. While neither regime strictly dominates the other in terms of social welfare, the paper shows that (1) as the reading or speaking cost converges to zero, the social welfare continuously converges to the first best; (2) consumers will have different preferences over duty-to-speak and dutyto-read regimes; and (3) the quality of the terms of non-disclosing firms may be higher. The results are consistent with the current chasm among scholars and courts over mandatory disclosure policy and also with the recent empirical findings. * Preliminary and Incomplete. Please do not cite or quote without permission. Acknowledgements to be added. Comments are welcome to yc2271@columbia.edu or ahc4p@virginia.edu.

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“…The fact that few consumers actually read most terms and conditions in full may also have implications for the quality of terms and conditions. In particular, as noted by Luth (2010, p. 164 [138]):…”

Section: Declarations That the Consumer Has Read And/or Understood Thmentioning

confidence: 91%

Improving online disclosures with behavioural insights

2018

OECD Digital Economy Papers

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Are “Pay Now, Terms Later” Contracts Worse for Buyers? Evidence from Software License Agreements

Cited by 41 publications

References 18 publications

The Failure of Mandated Disclosure

The Failure of Mandated Disclosure

Shrink-Wraps: Who Should Bear the Cost of Communicating Mass-Market Contract Terms?

Improving online disclosures with behavioural insights

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