Does Contract Disclosure Matter?

Journal of Institutional and Theoretical Economics JITE, Volume 168, Number 1, March 2012, pp. 94-119(26)

26 Pages Posted: 24 Feb 2016

Date Written: January 1, 2012

Abstract

Disclosure has long been the preferred regulatory approach to prevent one-sided standard-form contract terms, but its efficacy is unclear. For disclosure to be effective, it must increase readership of contracts and, conditional on reading, affect decisions. I use clickstream data on software shoppers to test these two conditions in the online context. I find that the prominence of disclosure of a software license agreement has little effect on readership. Moreover, those who read the license are equally likely to purchase the product regardless of its one-sidedness. Mandatory online disclosure regimes thus seem unlikely to impose competitive pressure on sellers.

Keywords: disclosure, fine print, boilerplate, consumer contracts, software, license

JEL Classification: D12, D18, K00, K12, L81

Suggested Citation

Marotta-Wurgler, Florencia, Does Contract Disclosure Matter? (January 1, 2012). Journal of Institutional and Theoretical Economics JITE, Volume 168, Number 1, March 2012, pp. 94-119(26). Available at SSRN: https://ssrn.com/abstract=2736521

Florencia Marotta-Wurgler (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

HOME PAGE: http://its.law.nyu.edu/facultyprofiles/profile.cfm?personID=27875

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