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Sticky Expectations: Responses To Persistent Over-Optimism In Marriage, Employment Contracts, And Credit Card Use, Sean Hannon Williams

Notre Dame Law Review

Most people underestimate the likelihood that they will experience negative events and overestimate the likelihood that the law will protect them if those events occur. Many of these mispredictions are highly resistant to change even in the face of accurate and available information. This Article illustrates the consequences of these “sticky” expectations using examples from marriage, employment, and credit card regulation. In each of these areas, erroneous expectations create costs. The largest and most common cost is the failure to adequately self-insure against future negative events like divorce, job loss, or high debt. But proposals for correcting irrational expectations can …