Law and Psychology of Consumer Contracts

This seminar will explore the law, psychology, and economics of consumer transactions and contracts, drawing largely on recent work in behavioral economics and public policy. Throughout the seminar we will explore a series of related questions: How do consumers perceive the contracts they sign and the rules governing their transactions, and how do the contract and the law affect sellers’ and consumers’ behavior? Do the rules and formal doctrines adequately protect unsophisticated parties or are consumers being failed by contract law? If consumers are being taken advantage of, is there anything the law can do to curb unfair or abusive market behavior?

The seminar will consist of three parts. The first part will introduce you to the fascinating world of behavioral economics, law, and public policy. We will explore behavioral approaches to law and economics (BLE), and contrast them with the traditional, standard account of law and economics. We will discuss the implications of BLE for law and public policy, and delve into current debates on nudging and paternalism. In the second part, we will focus on the intersection between behavioral economics and the laws governing consumer contracts, and explore the ways in which social sciences insights may shine a light on contemporary problems in consumer protection and regulation. In the third and final part of the seminar, we will delve into the heated, most current, debates on whether and how to regulate consumer markets. We will discuss the various regulatory tools currently used to protect consumers, and examine their promises and pitfalls.  

This seminar has three main goals: (1) to introduce you to the often surprising interactions between the law, market forces, and consumer psychology and to the challenges that consumer contracts present to traditional contract law theories and doctrines; (2) to expose you to the important role of economic and psychological insights in shaping legal scholarship and practice; and (3) enable you to consume empirical research, with a particular focus on experimental economics.

The seminar assumes no prior knowledge or background in psychology or economics.