Ben-Shahar in Forbes: More Information Isn't Always Better
Last month 7,500 online shoppers agreed to provide the British retailer Gamestation with more than just cash. They signed over their rights to eternal life. Gamestation added an "immortal soul clause" to its terms and conditions as part of an April Fool's Day experiment. (Notice of the transfer would be announced in 6-foot-high letters of fire.) Customers who read the clause and chose to opt out received a £5 discount on their next videogame purchase. Only 12% did, proving Gamestation's point that most people agree to terms and conditions without reading them.
This seems obvious to everyone but lawmakers. With each new social problem that emerges, from financially conflicted doctors to predatory lending, the knee-jerk solution is increased disclosure. It's cheap, it's easy and it supposedly empowers people to make better decisions. Trouble is, it doesn't work. In a forthcoming law review article professors Omri Ben-Shahar and Carl E. Schneider expose the spectacular failure of this commonly used regulatory technique.
In 2007 Ben-Shahar and Schneider were colleagues at the University of Michigan Law School, where Ben-Shahar taught contracts and Schneider focused on bioethics. Ben-Shahar, 47, who's now at the University of Chicago, was writing an article on the futility of boilerplate legal language in consumer transactions. Schneider, 62, had written extensively on the failure of informed consent in health law.
Over lunch one afternoon