Unintended Consequences: An Experimental Investigation of the (In)Effectiveness of Mandatory Disclosures

38 Pages Posted: 23 May 2015 Last revised: 26 Jun 2015

Molly Mercer

DePaul University

Ahmed E. Taha

Pepperdine University - School of Law

Date Written: 2015

Abstract

Nearly everyone who purchases a product that offers a mail-in rebate intends to redeem the rebate. Yet most consumers, including those who purchased the product because of the mail-in rebate, never submit the materials required to receive their rebates. Thus, prominent legal scholars propose requiring rebate offers to disclose actual redemption rates. The idea, of course, is that such disclosures will improve consumers’ purchase decisions by causing consumers to realize that they too are unlikely to redeem rebates. But is this what would really happen? We report the results of a controlled experiment that examines the effects of such disclosures on U.S. consumers. Surprisingly, we find that these disclosures backfire, increasing rather than decreasing consumers’ willingness to purchase rebated products. We discuss how our experimental results inform both the rebate debate and the more general debate about the likely success of other non-restrictive legal interventions.

Keywords: rebate, consumer protection, regulation, disclosure, behavioral economics, empirical legal studies, experimental legal studies

Suggested Citation

Mercer, Molly and Taha, Ahmed E., Unintended Consequences: An Experimental Investigation of the (In)Effectiveness of Mandatory Disclosures (2015). Santa Clara Law Review, Vol. 55, 2015, Forthcoming; Pepperdine University Legal Studies Research Paper No. 2015/9. Available at SSRN: https://ssrn.com/abstract=2609024

Molly Mercer (Contact Author)

DePaul University ( email )

Chicago, IL 60604
United States
(312)362-8956 (Phone)

HOME PAGE: http://samson.comtech.depaul.edu/faculty/member/Molly/Mercer/

Ahmed E. Taha

Pepperdine University - School of Law ( email )

24255 Pacific Coast Highway
Malibu, CA 90263
United States

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