Advanced search
1 file | 436.08 KB Add to list

The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency

Sven Höppner (UGent)
Author
Organization
Abstract
Cooling-off periods are universally employed in doorstep selling regimes. Paired with a right for consumers to withdraw from the contract, this legal instrument seeks to protect consumers against superior skilled and knowledgeable sellers thus restoring the balance of interests. According to prior literature, cooling-off periods also serve an economic function by moderating the abuse of market power, by mitigating problems of hidden characteristics, and by promoting consumer choice. If their drawbacks-mainly the creation of consumer moral hazard and shifting of risk to the seller-can be contained, cooling-off periods are hence supposed to yield efficiency gains. By thinking out of this box, the present paper showcases that cooling-off periods also establish the perverse incentive for the seller to increase consumer compliance to a level which outlasts the cooling-off period. I argue that inevitably occurring psychological factors and transaction costs from the cooling-off regime amplify each other, thus creating a hard-lock status-quo bias. Based on behavioural insights and transaction cost theory, I predict that an inefficiently high number of consumers will enter into a doorstep contract and that, at the same time, the number of cancelled contracts will be inefficiently low. Consequently, I propose to change the default inherent in current cooling-off regimes from presumed consent to presumed withdrawal in order to debias consumers' withdrawal decision.
Keywords
Cooling-off period, Off-premises contracts, Behavioural law and economics, Unintended consequence, Consumer protection, STATUS-QUO BIAS, POSTDECISION DISSONANCE, DECISION-MAKING, SELF-PERCEPTION, FACE TECHNIQUE, SUNK COST, CHOICE, COMPETITION, COMMITMENT, FAIRNESS

Downloads

  • (...).pdf
    • full text
    • |
    • UGent only
    • |
    • PDF
    • |
    • 436.08 KB

Citation

Please use this url to cite or link to this publication:

MLA
Höppner, Sven. “The Unintended Consequence of Doorstep Consumer Protection: Surprise, Reciprocation, and Consistency.” EUROPEAN JOURNAL OF LAW AND ECONOMICS 38.2 (2014): 247–276. Print.
APA
Höppner, S. (2014). The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency. EUROPEAN JOURNAL OF LAW AND ECONOMICS, 38(2), 247–276.
Chicago author-date
Höppner, Sven. 2014. “The Unintended Consequence of Doorstep Consumer Protection: Surprise, Reciprocation, and Consistency.” European Journal of Law and Economics 38 (2): 247–276.
Chicago author-date (all authors)
Höppner, Sven. 2014. “The Unintended Consequence of Doorstep Consumer Protection: Surprise, Reciprocation, and Consistency.” European Journal of Law and Economics 38 (2): 247–276.
Vancouver
1.
Höppner S. The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency. EUROPEAN JOURNAL OF LAW AND ECONOMICS. Springer; 2014;38(2):247–76.
IEEE
[1]
S. Höppner, “The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency,” EUROPEAN JOURNAL OF LAW AND ECONOMICS, vol. 38, no. 2, pp. 247–276, 2014.
@article{2106665,
  abstract     = {Cooling-off periods are universally employed in doorstep selling regimes. Paired with a right for consumers to withdraw from the contract, this legal instrument seeks to protect consumers against superior skilled and knowledgeable sellers thus restoring the balance of interests. According to prior literature, cooling-off periods also serve an economic function by moderating the abuse of market power, by mitigating problems of hidden characteristics, and by promoting consumer choice. If their drawbacks-mainly the creation of consumer moral hazard and shifting of risk to the seller-can be contained, cooling-off periods are hence supposed to yield efficiency gains. By thinking out of this box, the present paper showcases that cooling-off periods also establish the perverse incentive for the seller to increase consumer compliance to a level which outlasts the cooling-off period. I argue that inevitably occurring psychological factors and transaction costs from the cooling-off regime amplify each other, thus creating a hard-lock status-quo bias. Based on behavioural insights and transaction cost theory, I predict that an inefficiently high number of consumers will enter into a doorstep contract and that, at the same time, the number of cancelled contracts will be inefficiently low. Consequently, I propose to change the default inherent in current cooling-off regimes from presumed consent to presumed withdrawal in order to debias consumers' withdrawal decision.},
  author       = {Höppner, Sven},
  issn         = {0929-1261},
  journal      = {EUROPEAN JOURNAL OF LAW AND ECONOMICS},
  keywords     = {Cooling-off period,Off-premises contracts,Behavioural law and economics,Unintended consequence,Consumer protection,STATUS-QUO BIAS,POSTDECISION DISSONANCE,DECISION-MAKING,SELF-PERCEPTION,FACE TECHNIQUE,SUNK COST,CHOICE,COMPETITION,COMMITMENT,FAIRNESS},
  language     = {eng},
  number       = {2},
  pages        = {247--276},
  publisher    = {Springer},
  title        = {The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency},
  url          = {http://dx.doi.org/10.1007/s10657-012-9336-1},
  volume       = {38},
  year         = {2014},
}

Altmetric
View in Altmetric
Web of Science
Times cited: