Comprehensibility and Accountability
Oxford Journal of Legal Studies (Forthcoming)
24 Pages Posted: 5 Jan 2021
Date Written: December 6, 2020
In Incomprehensible!, Wendy Wagner highlights a blind spot in the design of many legal programs: they demand that market players share as much information as possible, but neglect to demand that the information be conveyed comprehensibly. Wagner shows how the neglect of comprehensibility undermines the law’s effectiveness, and provides a menu of concrete proposals for alleviating it. Yet Wagner’s analysis leaves one important question unanswered: will making information more comprehensible necessarily lead to more accountability and better policy outcomes? This review article examines the elusive link between comprehensibility and accountability, and spotlights four common scenarios whereby the former is not a sufficient or even a necessary condition for the latter. In some markets, we have accountability without comprehensibility, through the threat of reputational sanctions. In others, we have comprehensibility without accountability: disclosures are perfectly readable, yet the end users opt not to read them. A third scenario is where more comprehensibility actually leads to less accountability: top-down mandates of comprehensibility crowd out efforts by private intermediaries to process complex information. Finally, there are circumstances where comprehensibility leads to too much accountability: in certain tradeoffs, more accountability leads to worse decision-making.
Keywords: Disclosure, Information Overload, Information Asymmetries, Accountability, Readability, Transparency, Consumer Protection, Economic Regulation, Securities Markets
JEL Classification: D82, D83, K10, K12, K22, K23, K40
Suggested Citation: Suggested Citation