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Full-Text Articles in Law
Justifying Bad Deals, Tess Wilkinson-Ryan
Justifying Bad Deals, Tess Wilkinson-Ryan
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In the past decade, psychological and behavioral studies have found that individual commitment to contracts persists beyond personal relationships and traditional promises. Even take-it-or-leave it consumer contracts get substantial deference from consumers — even when the terms are unenforceable, even when the assent is procedurally compromised, and even when the drafter is an impersonal commercial actor. Indeed, there is mounting evidence that people import the morality of promise into situations that might otherwise be described as predatory, exploitative, or coercive. The purpose of this Article is to propose a framework for understanding what seems to be widespread acceptance of regulation …
The Behavioral Economics Of Multilevel Marketing, Heidi H. Liu
The Behavioral Economics Of Multilevel Marketing, Heidi H. Liu
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Multilevel marketing companies (MLMs) - sales organizations that compensate independent consultants based on the sales and recruitment of other consultants - form a significant part of the American economy. Yet, MLMs provide little information to regulators and potential participants regarding potentially material information. Although MLMs are often compared to pyramid schemes, consultants argue that participation in a MLM allows them to make money outside of the traditional full-time labor force. This paper examines the law, economics, and psychology of MLMs, suggesting that MLMs may draw on prospective consultants' cognitive biases in persuading consultants to join and continue a MLM. Consultants …
The Common Sense Of Contract Formation, Tess Wilkinson-Ryan, David A. Hoffman
The Common Sense Of Contract Formation, Tess Wilkinson-Ryan, David A. Hoffman
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What parties know and think they know about contract law affects their obligations under the law and their intuitive obligations toward one another. Drawing on a series of new experimental questionnaire studies, this Article makes two contributions.First, it lays out what information and beliefs ordinary individuals have about how to form contracts with one another. We find that the colloquial understanding of contract law is almost entirely focused on formalization rather than actual assent, though the modern doctrine of contract formation takes the opposite stance. The second Part of the Article tries to get at whether this misunderstanding matters. Is …
Demand For Breach, Tess Wilkinson-Ryan
Demand For Breach, Tess Wilkinson-Ryan
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These studies elicit behavioral evidence for how people weigh monetary and non-monetary incentives in efficient breach. Study 1 is an experimental game designed to capture the salient features of the efficient breach decision. Subjects in a behavioral lab were offered different amounts of money to break the deal they had made with a partner. 18.6% of participants indicated willingness to break a deal for any amount of profit, 27.9% were unwilling to breach for the highest payout, and the remaining subjects identified a break-point in between. Study 2 is an online questionnaire asking subjects to take the perspectives of buyers …
Instructing Juries On Noneconomic Contract Damages, David A. Hoffman, Alexander Radus
Instructing Juries On Noneconomic Contract Damages, David A. Hoffman, Alexander Radus
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Gathering pattern contract jury instructions from every State, we examine jurisdictions' treatment of noneconomic damages. While the conventional account holds that there is a uniform preference against awards of noneconomic damages, we find four different approaches in pattern instructions, with only one state explicitly prohibiting juries from considering noneconomic losses. Lay juries have considerably more freedom to award the promisee's noneconomic damages than the hornbooks would have us believe. We substantiate this claim with an online survey experiment asking respondents about a common contract case, and instructing them using the differing pattern forms. We found that subjects routinely awarded more …
Breach Is For Suckers, Tess Wilkinson-Ryan, David A. Hoffman
Breach Is For Suckers, Tess Wilkinson-Ryan, David A. Hoffman
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This paper presents results from three experiments offering evidence that parties see breach of contract as a form of exploitation, making disappointed promisees into “suckers.” In psychology, being a sucker turns on a three-part definition: betrayal, inequity, and intention. We used web-based questionnaires to test the effect of each of the three factors separately. Our results support the hypothesis that when breach of contract cues an exploitation schema, people become angry, offended, and inclined to retaliate even when retaliation is costly. This theory offers a useful advance insofar it explains why victims of breach demand more than similarly situated tort …
Moral Judgment And Moral Heuristics In Breach Of Contract, Tess Wilkinson-Ryan
Moral Judgment And Moral Heuristics In Breach Of Contract, Tess Wilkinson-Ryan
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Most people think that breaking a promise is immoral, and that a breach of contract is a kind of broken promise. However, the law does not explicitly recognize the moral context of breach of contract. Using a series of web-based questionnaires, we asked subjects to read breach of contract cases and answer questions about the legal, financial, and moral implications of each case. Our results suggest that people are quite sensitive to the moral dimensions of a breach of contract, especially the perceived intentions of the breacher. In the first study, we framed the motivation for a contractor's breach as …