Tuesday, March 14, 2017

The fine print

An Econ [totally rational human being] will read and understand the fine print of a contract before signing it, but Humans usually do not. An unscrupulous firm that designs contracts that customers will routinely sign without reading has considerable legal leeway in hiding important information in plain sight. A pernicious implication of the rational-agent model in its extreme form is that customers are assumed to need no protection beyond ensuring that the relevant information is disclosed. The size of the print and the complexity of the language in the disclosure are not considered relevant—an Econ knows how to deal with small print when it matters. In contrast, the recommendations of [the book] Nudge require firms to offer contracts that are sufficiently simple to be read and understood by Human customers. It is a good sign that some of these recommendations have encountered significant opposition from firms whose profits might suffer if their customers were better informed. A world in which firms compete by offering better products is preferable to one in which the winner is the firm that is best at obfuscation.— Thinking, Fast and Slow, page 413

<idle musing>
That's the final snippet from this book—a very relevant book that you should take the time to read. I was only able to skim off the top in these excerpts. The book itself fills in the details.
</idle musing>

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