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
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: Suggested Citation