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The average consumer, the unfair commercial practices directive, and the cognitive revolution
Abstract
This article examines the merit of the test of the average consumer as a basis for judicial and regulatory action. In the first part, we describe the origin of the test, its application in the Unfair Commercial Practices Directive and its possible developments. In the second part, we discuss the theoretical grounds of the average consumer test (i.e., information and rationality), drawing upon the studies of cognitive psychology and behavioural economics concerning consumers’ behaviour. The result of our analysis is that we call into serious question the practical workability of the test of the average consumer, which requires consumers an overly demanding standard of rationality and information without dedicating much attention to the real functioning of consumer behaviour. The average consumer may be described as an interesting, anti-paternalistic and, to some extent, useful notion. It is, however, an overly simplistic concept with little correspondence with the real world of individual consumer behaviour and should be reinterpreted more flexibly, or even abandoned to mirror consumer behaviour more effectively. Copyright Springer Science+Business Media, LLC 2007
... Other studies AI and consumers manipulation: What the role of EU fair marketing law? \ Federico Galli have proved that it is possible to predict users' psychological transient states, such as mood and emotions, attention and stress, by analysing real-time spoken and written language (D'mello and Kory, 2015;Hu andFlaxman, 2018) andvideo (Teixeira et al., 2012). There is a whole emerging field of research and business applications called 'affective computing' whose purpose is to create software that recognises and processes human emotions (Cambria, 2016). ...
... Other studies AI and consumers manipulation: What the role of EU fair marketing law? \ Federico Galli have proved that it is possible to predict users' psychological transient states, such as mood and emotions, attention and stress, by analysing real-time spoken and written language (D'mello and Kory, 2015;Hu andFlaxman, 2018) andvideo (Teixeira et al., 2012). There is a whole emerging field of research and business applications called 'affective computing' whose purpose is to create software that recognises and processes human emotions (Cambria, 2016). ...
... With some exceptions, this notion is steadily interpreted by the European Court of Justice as the "reasonably well-informed DOUTRINA and reasonably observant and circumspect". At the same time, however, it has been repeatedly observed that this traditional conception of consumer clashes with the basic findings of behavioural economics, according to which consumers have bounded rationality and limited willpower, are guided by heuristics and their judgement is often biased (Incardona and Poncibo, 2007;Sibony, 2014). This is even truer in the AI landscape, where companies can easily estimate the tendency of each consumer to deviate from rational decision-making, detect and react to emotion. ...
... Whereas the "average consumer" benchmark is meant to be applied on a case-by-case basis and evaluate the concrete commercial practice in question, the per se prohibitions are general in the sense that they ban specified practices as such, i.e. without an assessment of their misleading effects in concreto. 166 Cf. Incardona and Poncibò (2007) for a comprehensive analysis. 167 Hereinafter UCPD 168 UCPD art.3.3. ...
... In the EU, the legal basis for such judgments is the general prohibition against misleading commercial practices in the Unfair Commercial Practices Directive (2005/29/EC) as related specifically to food labelling by the Food Regulation (2002/178/EC) and implemented in the national legislation of the Member States. These rules leave ample room for individualized common-sense reasoning in which a key benchmark is whether the "average consumer" would be misled or not Incardona & Poncibò, 2007;Howells, Micklitz & Wilhelmsson, 2006). However, the specifics to which the rules must be applied in the present case are in themselves not legal, but linguistic in nature: it is a matter of what words mean, and how (average) consumers understand them. ...
... In view of the accelerating harmonization of sometimes very different national legal rules and practices within the EU, recent years have seen an increased interest in contributions from outside the strictly legal sphere, including cognitive and linguistic research, e.g.Incardona & Poncibò (2007);Engberg (2007);Smith 2007;Legrand (1996).189 In some cases, this difference does not seem to be clearly recognized by the immediate actors. ...
... The average consumer is an average member of a group and it is a reasonably well-informed and reasonably observant and circumspect person (Schebesta & Purnhagen, 2020). Although Incardona & Poncibo (2007) note that when evaluating unfair commercial practices, the concept of an average consumer requiring rationality and information should be interpreted more flexibly taking into account individual consumer behaviour, it is used as a benchmark for the classification of unfair practices. Figure 1 shows all the criteria a commercial practice must fulfil to be allowed. ...
... The Directive also addresses the targeting and exploitation of "particularly vulnerable" consumers (Incardona & Poncibò, 2007). Article 5(3) of the Directive therefore awards additional protection to "a clearly identifiable group of consumers who are particularly vulnerable" to a certain commercial practice or product. ...
This paper considers whether a duty to provide consumers with disabilities with pre-contractual information in an accessible format, or in an otherwise personalised format, can be read into EU consumer protection law. Such a duty could be regarded as a particular form of reasonable accommodation. The paper explores this issue in the context of three key consumer protection instruments: the Unfair Commercial Practices Directive, the Consumer Credit Directive, and the Consumer Rights Directive. The paper argues that the Directives should be interpreted in light of the EU’s obligations under the UN Convention on the Rights of Persons with Disabilities (CRPD) which addresses, inter alia, the accessibility of information. Whilst consumer protection is an area of shared competence between the EU and its Member States, the three Directives examined in the paper largely provide for “full harmonisation,” thereby limiting the scope Member States have for taking action in these fields. In light of this, the paper argues that the EU has, to a large degree, taken on responsibility for complying with the CRPD in these fields, and that the Directives should be interpreted in light of those obligations. The EU Charter of Fundamental Rights can further bolster a human rights compatible interpretation of EU consumer protection directives. The paper also considers the extent to which the Directives allow Member States some residual competences to set requirements concerning pre-contractual information for persons with disabilities. To the extent that such competences exist, the paper argues that CRPD-compatible minimum requirements for pre-contractual information provided to consumers with disabilities should be read into the Directives by the European Court of Justice. Establishing CRPD-compatible minimum requirements in this field would reduce the need for individual Member States to take action to comply with the CRPD, and therefore reduce the risk of divergent national standards which could undermine the internal market goals of the relevant Directives. The paper concludes that a duty to provide a de facto reasonable accommodation, in terms of accessible and additional information, can be read into the Consumer Credit Directive and the Consumer Rights Directive. A more limited duty, concerning only the provision of additional information for persons with disabilities, can be read into the Unfair Commercial Practices Directive. It is unclear whether case law of the Court of Justice can be interpreted as requiring the provision of accessible information under this last Directive.
... 52 This definition was criticised as being too narrow, 53 arbitrary, 54 paternalistic and superfluous. 55 The Court of Justice does not delve into the vulnerable consumer model. 56 The European Commission claims, however, that, despite the wording of Article 5(3), the UCPD provides a non-exhaustive list of characteristics that make a consumer 'particularly susceptible'. ...
Seit dem ersten IGF-Gipfel der Vereinten Nationen 2006 in Athen dient das Treffen Entscheidungsträgern als Forum und Informationsquelle – v.a., was die Nutzung neuer Technologien– einschließlich rechtlicher und politischer Konsequenzen – angeht. Die Diskussionsbeiträge der 6. Tagung in Polen zum Thema „Internet und neue Technologien“ sind in diesem Band zusammengefasst.
... The leitbild of the "sovereign consumer" (Reisch & Zhao, 2017), based on the traditional assumptions of rationality and information (Incardona & Poncibò, 2007), has been increasingly questioned. It has been shown that consumers are unable to process all the available information because of their innate "bounded rationality" (Simon, 1955). ...
Findings from behavioural research are gaining increased interest in EU legislation, specifically in the area of unfair commercial practices. Prior research on the Mars case (Purnhagen and van Herpen 2017) has left open whether empirical evidence can provide an indication that this practice of using oversized indications of additional volume alters the transactional decision of consumers. This, however, is required to determine the “misleadingness” of such a practice in the legal sense as stipulated by the Unfair Commercial Practices Directive 2005/29/EC. The current paper closes this gap by illustrating how behavioural research can inform legal interpretation. In particular, it extends the previous research in two important ways: first, by examining the actual choice that people make; second, by investigating whether the effects remain present in a context where a comparison product is available. Yet, while supporting and extending the findings of the study from Purnhagen and van Herpen (2017) on deceptiveness, the current study could not produce empirical evidence of a clear influence on the transactional decision of consumers, in the way ‘UCPD’ requires.
... The leitbild of the "sovereign consumer" (Reisch & Zhao, 2017), based on the traditional assumptions of rationality and information (Incardona & Poncibò, 2007), has been increasingly questioned. It has been shown that consumers are unable to process all the available information because of their innate "bounded rationality" (Simon, 1955). ...
Findings from behavioural research are gaining increased interest in EU legislation, specifically in the area of unfair commercial practices. Prior research on the Mars case (Purnhagen and van Herpen 2017) has left open whether empirical evidence can provide an indication that this practice of using oversized indications of additional volume alters the transactional decision of consumers. This, however, is required to determine the “misleadingness” of such a practice in the legal sense as stipulated by the Unfair Commercial Practices Directive 2005/29/EC. The current paper closes this gap by illustrating how behavioural research can inform legal interpretation. In particular, it extends the previous research in two important ways: first, by examining the actual choice that people make; and second, by investigating whether the effects remain present in a context where a comparison product is available. Yet, while supporting and extending the findings of the study from Purnhagen and van Herpen (2017) on deceptiveness, the current study could not produce empirical evidence of a clear influence on the transactional decision of consumers, in the way “UCPD” requires.
... If such developments were expected to generate growth and jobs, they also required an active demand side, with confident and empowered consumers (EC, 1992). With a significant widening of choice (of providers and tariff schemes) and increasingly complex information, the very concept of 'average consumer' came to be challenged (Howells, 2005;Incardona & Poncibò, 2007). By this time, it was clear that consumer preferences were not just revealed (one of the postulates of microeconomics) but instead influenced by the choice context (see Ariely et al., 2003). 1 In addition, significant academic developments and the 2007-2008 financial crisis called for a change in the mainstream analytical framework, and gave further impetus to BI. Simply put, market bubbles would not happen if economic agents were rational and asset prices were always 'right' (Thaler, 2009). ...
In the past decade, policy-making around the world has increased its attention to behavioural insights (BI). The European Commission (EC) identified this trend early on and has incorporated BI to its policy-making over several years. However, this experience has not been formally documented, or systematically analysed, from a policy studies perspective, leaving a large amount of experience-based knowledge on behavioural governance untapped. Our contribution aims at closing this gap, clarifying the practices by which BI are gaining epistemic authority and contributing to the European Union's (EU) policy instruments. This paper presents the evolution of BI thinking inside the EC, illustrates how BI are introduced in the policy cycle, and explores future challenges to and opportunities for mainstreaming BI at every level and stage of policy-making in the EU.
... 100 In particular, there is some evidence that irresponsible borrowing can be linked to other individual propensities and characteristics. For instance, there is also some evidence that in (USA) students the propensity for developing into compulsive buyer is positively associated with drinking, having unprotected sex and smoking, and with individuals perceptions of money as sign of power and prestige, while negatively associated with parents' income (i.e., students with poorer parents are more likely to become compulsive 94 Incardona and Poncibò (2007)32 ff. Generally Gigerenzer and Engel (2006). ...
... The notion of the average consumer is frequently used as a benchmark against which consumer understanding should be defined (Incardona and Poncibò, 2007). While this notion is central to regulatory frameworks that enable consumer autonomy (e.g. ...
The assumption that consumers voluntarily accept or decline marketing offerings provides the ethical justification that gives marketing as a social system its license to operate. Consumer autonomy is, therefore, the key ethical principle of marketing in capitalistic economies. However, even in domains with extensive regulatory frameworks and advanced market conditions, consumers are often ill-informed or underinformed. The resultant lack of epistemic confidence diminishes consumers’ ability to make informed choices. At the same time, consumers are by default exposed to promotional content designed to persuade them to accept marketing offerings. This threatens personal autonomy. We develop a concept of consumer autonomy which marketing regulations should protect and promote to enhance informed decision-making. We design autonomy to be robust in situations where individuals are exposed to persuasive attempts to influence them to choose a specific course of action. As such, our concept of autonomy is applicable to a range of contexts beyond marketing where it is necessary to balance external influences and individual autonomy.
... In the light of a vast and ever-growing choice of products in many sectors labels are overwhelmingly seen as helpful and successful. Incardona and Poncibò (2007) however point out that "extensive, multi-dimensional information leads to a significant decrease in the quality of consumer choice". Moreover, due to very different perception and informational processing abilities of consumers the omnipresent advertising may cause informational overload and informational asymmetries that are difficult to channel. ...
The paper tackles the issue of how different incentive schemes result in unsustainable consumption patterns. Though this may sound as a topical issue, more research seems to be undertaken aiming to enhance the “good” (i.e. greener products and services) while little research focuses on the question which policies and regulatory regimes actually prevent people from reducing their consumption levels in the resource-intensive demand areas despite increasing knowledge on and options for sustainable consumption. The paper presents findings on such policy inconsistencies as driving forces of unsustainable consumption.
... To understand rational and subconscious behaviour within legal frameworks, Incardona and Poncibo (2007) state that the European Unfair Commercial Practices Directive (UCPD) establishes information needed before purchasing including rights of withdrawal in a non-ambiguous way. Consumer perceptions vary; people do not objectively see and hear what surrounds them. ...
The efficacy and appropriateness of current advertising laws are questioned as to how customers behave emotionally towards advertising. Contacts were made with world-renowned respondents from the advertising, legal and neuroscience communities. Their responses are documented along with apposite secondary sourced material. Neuromarketing shows that emotive and rational thinking are mutually controlled. The increasing regulatory landscape has forced some advertisers to be more creative and more covert in their communications. Controversy surrounds subliminal perception with some saying it is misjudged and groundless. Suggestions are made as to how the advertising industry should engage with broader application of consumer psychology processes to evaluate regulatory procedures to improve existing laws. ARTICLE HISTORY
... Paradoxically, as shown in the overview study of Zniva and Weitzl (2016), the chronological age dominates despite its explicit limitations. For this reason, the concept of an average consumer requires a careful and critical approach, as it is a greatly simplified concept that does not reflect actual consumer behaviour (Szmigin and Carrigan, 2000;Incardona and Poncibò, 2007;Myers and Lumbers, 2008). Analogously, generalisations working exclusively with the chronological measurement of age require a sensitive approach. ...
Seniors represent an important group of consumers for two reasons. The first reason is their specific consumer behaviour, differing from any other generation of consumers. The second reason is their growing number in many countries, including Slovakia. Consequently, increased attention has recently been paid to this group of consumers. The paper aims to evaluate the consumer behaviour of seniors visiting shopping malls in Bratislava (Slovakia) from the spatial context by using GIS tools. The consumer behaviour of seniors (60+) was analysed in terms of the changing distance between the address of residence and shopping mall, in the context of two variables: monthly income and time spent at a shopping mall. The study results show that distance continues to play a significant variable in understanding the consumer behaviour of seniors.
... Following this line of thought, one could argue that instances of unfair manipulation occur only where signals (or nudges) seek to influence system 1 thinking in a way that is not transparent (and hence unnoticed) to the user (Hansen & Jespersen 2013). Similarly, as Incardona and Poncibò (2007) argue, emotions and moods can actually play a surprisingly central role in consumers' decision-making. What if data power is not used to uncover (hidden) preferences and desires, but to manipulate consumers into having particular emotions that they might not have had in the first place? ...
In this article, we discuss mHealth apps and their potential to influence the user’s behaviour in increasingly persuasive ways. More specifically, we call attention to the fact that mHealth apps often seek to not only influence the health behaviour of users but also their economic behaviour by merging health and commercial content in ways that are hard to detect. We argue that (1) such merging of health and commercial content raises specific questions concerning the autonomy of mHealth app users, and (2) consumer law offers a promising legal lens to address questions concerning user protection in this context. Based on an empirically informed ethical analysis of autonomy, we develop a fine-grained framework that incorporates three different requirements for autonomy that we call “independence,” “authenticity,” and “options.” This framework also differentiates between three different stages of mHealth app use, namely installing, starting to use, and continuing to use an app. As a result, user autonomy can be analysed in a nuanced and precise manner. Since the concept of autonomy plays a prominent, yet poorly understood role in unfair commercial practice law, we utilize the ethical analysis of autonomy to guide our legal analysis of the proper application of unfair commercial practice law in the mHealth app domain.
... Two, our findings provide a critical backdrop against which to assess strategies, such as the European e-health strategies, which tend to differentiate little between different types of users. Here, it is important to bear in mind that certain consumers are probably better positioned to self-manage their health (e.g., the "average" e-health consumers who is young, highly educated, and e-health literate) than other more "vulnerable" consumers (for a more in-depth discussion on the notions of "average" and "vulnerable" consumer, see Baker, Gentry, and Rittenberg 2005;Duivenvoorde 2014;Hare, Law, and Brennan 2012;Incardona and Poncib o 2007;London Economics, VVA Consulting, and Ipsos Mori 2016). Moreover, with the increasing "datafication" and "commodification" of health data through online health platforms, users are increasingly challenged to identify trustworthy versus less trustworthy actors in this sector (Andrejevic 2014;Van Dijck and Poell 2016). ...
This article provides a more differentiated understanding of mobile health consumers, and considers whether health app use may contribute to new digital inequalities. It focuses on factors associated with mobile health app use, and identifies which factors explain the use of different types of health apps. Data from a large representative sample of the Dutch population (N = 1,079) show that mobile health app users were generally younger, higher educated, and had higher levels of e-health literacy skills than non-users. Interestingly, different usage patterns were found for specific types of health apps. Theory and policy implications are discussed.
... From this perspective, sellers and marketers may deploy unethical (and even illegal) practices (Caplovitz, 1963). Among these practices, we find false labeling (Incardona and Poncibò, 2007), bait advertisement (Wilkie et al., 1998), or lending to uncreditworthy borrowers (Chatriot, 2006). Redlining is another discriminatory practice that involves avoiding setting up businesses in areas where ethnic consumers live (D'Rozario and Williams, 2005). ...
Purpose
The purpose of this study is both to explore how people with “hidden” auditory disorders experience exclusion in servicescapes and to unfold the coping strategies they set up to deal with it.
Design/methodology/approach
Findings from 15 semi-structured interviews and participant observations with individuals suffering from auditory disorders are presented through the paper.
Findings
The findings indicate that individuals with auditory disorders deploy three types of coping strategies when exposed to sensory overload in servicescapes: choosing between physical servicescapes, opting for electronic devices and e-servicescapes and delegating shopping to relatives.
Practical implications
The study underlines how, through temporary or permanent modifications of servicescape cues, service providers give consumers opportunities to bypass situations involving sensory overload. Implications for e-servicescapes and public policy are also raised.
Originality/value
The findings reveal how the coping strategies used by individuals with auditory disorders contribute to their exclusion from the marketplace on the basis of both individual characteristics and types of servicescapes.
... These factors can explain what may otherwise seem a baffling lack of real-world evidence being presented in cases such as Google v ACCC. Yet, this is not unique to Australia or the common law, with the "average consumer" concept in EU law also not being dependent on statistical evidence of actual consumer behaviour (Incardona and Poncibo 2007). ...
Against the legal backdrop of proceedings against Google in various jurisdictions regarding the layout of its search result page, this article presents the results of a survey of a representative sample of 1014 Australian consumers, investigating their use of the Internet and specifically Google’s search engine, and the implications of these findings for consumer law and policy concerning the operation of search engines. The study is the first of its kind in Australia, despite litigation against Google in this jurisdiction for alleged misleading and deceptive conduct. The survey findings indicate that consumers have a lack of understanding about the operation and origin of the different elements of the Google search engine. In particular, the findings show particular confusion in relation to the operation and origin of Google’s related vertical services. Such confusion seems to be more pronounced among older respondents and those without higher education qualifications, although the survey revealed some more surprising and unexpected results in terms of the demographics of confusion. These findings are important for several reasons. Firstly, they identify and point to a gap in consumer knowledge about Google search that should be addressed, presenting an opportunity for consumer education in this area. Secondly, this research challenges the widely held assumption that the average (Australian) Internet user has a basic understanding about the operation and function of the Google search engine. Thirdly, the results leave open the possibility for further proceedings against Google in Australia on the basis of consumer law, the decision in Google v ACCC notwithstanding. This points to the potential for a more active role for consumer law in the digital ecosystem to address problems emanating from large and powerful platform providers such as Google than it previously has occupied.
... 12 Nor are these conversations confined to trade mark law, sim- ilar issues are evident across areas of law which incorporate the mental and behavioural responses of consumers, most obviously consumer protection law but extending further afield. 13 One focal point for this debate is the pluriform nature of the 'average consumer', whose putative response sets rules in a variety of consumer-oriented contexts in European law. 14 Most of this literature focuses on doctrine, on how statutes, directives, and court decisions conceptualise the identity, features, and behaviour of consumers. ...
Although consumer responses to signs and symbols lie at the heart of trade mark law, courts blow hot and cold on the relevance of empirical evidence - such as surveys and experiments - to establish how consumers respond to alleged infringing marks. This ambivalence is related to deeper rifts between trade mark doctrine and the science around consumer decision-making. This article engages with an approach in ‘Law and Science’ literature: looking at how cognitive psychology and related disciplines conceptualise consumer decision-making, and how counterintuitive lawyers’ approaches appear from this perspective. It demonstrates how, especially when proving confusion, decision-makers in trade mark demand the impossible of empiricists and are simultaneously blind to the weaknesses of other sources of proof. A principled divergence, without seeking to collapse the gaps between legal and scientific approaches, but taking certain small steps, could reduce current problems of proof and contribute to better-informed, more empirically grounded decisions.
... Thus, the 'average consumer' is seen as an overly simplistic concept with little reflection of the real world of individual consumer behavior and should be reinterpreted more flexibly, or even abandoned to mirror consumer behavior more effectively. 93 Due to the broad concepts contained in the UCPD, behavioral insights could be incorporated by way of judicial interpretation into the existing legal framework. 94 Marketing practices often use influencing techniques to manipulate consumers on the basis of the natural human tendencies. ...
The rules provided by the civil codes on defects in consent were designed at a time when the notion of consumer law did not exist and fairness at the pre-contractual stage was not widely considered as a value worthy of protection. Matters have changed radically in the last three decades. The proliferation of rules protecting consumers on a European level, especially through information duties and rights of withdrawal, and the growing impact of general clauses, has led to a fragmentation of domestic contract law. This clash of different sets of rules is particularly conspicuous in the field of unfair commercial practices as the European legislator has not made provision for specific private law remedies for individual consumers in cases of misleading and aggressive commercial practices. This article addresses the particular issue of the applicability of the law of fraudulent misrepresentation to cases of misleading commercial practices. The purpose is to reconsider ‘fraud’ in terms of a defect in consent, in a manner that is both more in line with the modern features of European contract law and better able to counteract new market strategies based on exploiting cognitive weaknesses. The focus is thus put on the relationship between pre-contractual information duties and defective consent, as well as on some insights of law and economics, which demonstrate that ‘consent theories’ or ‘will theories’ cannot provide precise criteria to indicate when a contract should be void. In conclusion, a possible legislative intervention aiming to substitute the rules on fraud for a set of remedies for violation of information duties is discussed.
Il volume analizza il panorama giuridico che compone il diritto della pubblicità,
caleidoscopio di regole tutt’altro che armonico. Attraverso un’opera
di sistemazione concettuale della disciplina, con approccio progressivamente
analitico, l’autore esamina nel dettaglio i diversi prismi della comunicazione
commerciale, all’inizio presentata nella sua complessità
fenomenica. La pubblicità viene introdotta nella dimensione del diritto costituzionale,
civile e autodisciplinare, successivamente indagata quale pratica
commerciale nei rapporti business to consumer e in quelli business to business,
dunque declinata secondo le discipline speciali dei diversi media comunicativi
e di alcune, particolari, categorie merceologiche. All’analisi della disciplina
sostanziale segue, infine, l’approfondimento degli strumenti di tutela
contro le forme illegittime di pubblicità, di cui vengono esaminate luci e
ombre al cospetto del particolare fenomeno trattato.
The European Union, while acknowledging the pitfalls of problematic consumer markets, seems largely unwilling to deviate from an inflexible standard of consumer behaviour based on the ideal of the average consumer as a reasonably well-informed and observant market participant. The article aims to contrast this high consumer standard with the alternatives offered by the vulnerable consumer concept. The first part of the article deals with the notion of the average consumer as defined in European Union law and its interpretation by the European Court of Justice, particularly in cases concerning problematic markets. This is followed by a brief analysis of two potential interpretations of consumer vulnerability developed in the consumer protection literature. The final chapter examines in more detail the appearance of a singular major exception to the average consumer concept within the European Union consumer protection regime: the narrow scope of consumers acknowledged as ‘particularly vulnerable.’
The topic of this dissertation is the analysis of buyer power and its treatment in EU competition law. The aim of the study and its main research question are connected to identifying, synthesizing, discussing, and evaluating the buyer power regulation in EU competition law. To do so, my research seeks to clarify what buyer power is, how it is legally treated, and whether there is a consistent and coherent buyer power competition policy and legal regulation in EU competition law. Buyer power represents the other side of competition law, focusing on buying conducts and how a buyer can exert its market power to the detriment of competition. Buyer power is an umbrella concept that groups different forms of buying and bargaining over purchasing prices: monopsony and bargaining power (sensu stricto). I define buyer power as the market power possessed by a buyer (or a coordinated group of buyers) that allows said buyer to reduce purchasing prices it pays for an input in a profitable manner below the supplier’s standard selling price. This price reduction can be obtained by either withholding purchases – monopsony – or through bilateral negotiations and pure competitive bargaining that grants the buyer with better contractual conditions. In both cases, the buyer captures a higher share of surplus when negotiating with the supplier that would have been retained by the supplier, absent buyer power. These better terms and conditions can be the result of efficient outcomes, as usually occurs with bargaining power. As it stems from this definition, the economics effects of buyer power are ambiguous. The welfare results caused by it would depend on the type of buyer power exercised and the competitiveness of the upstream and downstream market. In the upstream market buyer power is exerted vis-à-vis suppliers and its effects may be efficient and competitive enhancing because it neutralizes opposed seller market power and reduces the purchasing prices towards the competitive level that may be passed on to end consumers in the form of lower prices, if there is sufficient competition in the related downstream market. However, buyer power may be anticompetitive and inefficient because it may imply a reduction of purchases and, therefore, an allocative loss, or be used with exclusionary effects of rival buyers in the upstream market or even rival retailers in a connected downstream market. Therefore, my thesis assumes that there tends to be both a positive and negative view concerning buyer power.
Artificial Intelligence (AI) technology keeps on being developed and has started to emerge into some devices and/or machines. AI can be embedded in many forms, and one of them is voice recognition technology. This technology that offered a human-like interactive feature has featured such as in iPhone Siri and Amazon Alexa. The rising trend of this technology also showed when Amazon has been granted a new patent regarding its virtual assistant, Alexa, in 2018. According to the patent, the device will automatically infer the user’s voice to determine their emotion in order to generate targeted advertisements. This patent hence posed a risk of harming the user’s autonomy since the user is unable to leave their emotions to go undetected by the device. Therefore, the commodification of emotion could challenge the adequacy of the current legal regimes, in particular, data protection and consumer laws since both have the primary concern to protect the autonomy and dignity of consumers. This research aimed to analyse whether the current European data protection and consumer laws are adequate to mitigate the risks posed by the commodification of emotion to conduct targeted advertising in the voice recognition technology.
The chapter addresses the divide between marketing approaches to food labelling and marketing, which rely extensively on empirically founded behavioural and cognitive insights, and socio-political and regulatory approaches, which tend to be primarily concerned with legal rule-making per se. In continuation of earlier debates, the chapter stresses the need for a more dynamic interplay between the two domains and sets the scene for the contributions to facilitating such developments presented in this book.KeywordsFood marketingFood labellingLegal regulationUnfair commercial practicesEmpirical evidenceSocial sciencesCognitive sciencesBehavioural sciences
This chapter offers an introduction to EU unfair commercial law. The latter is centred around the Unfair Commercial Practices Directive, which prohibits commercial practices which, contrary to the requirements of professional diligence, are likely to distort the economic behaviour of the average consumer. The Directive dates back to 2005, has been applied extensively at the EU and national level, and has been—and currently is—the subject of intense debate among consumer lawyers and policy-makers. Its general scope and technology-neutral approach make it especially suitable for developing a discussion on commercial fairness in algorithmic marketing.
Loot boxes have recently become a game mechanism of concern to policy-makers and regulators. The similarity between loot boxes and gambling is clear, and loot boxes and their regulation are commonly viewed through the lens of gambling. By contrast, very little attention has been given to tackling them as unfair, and in particular aggressive, commercial practices under consumer law. This article argues that by classifying the provision of loot boxes as a potentially aggressive commercial practice we will see that consumer law may protect gamers from some of the significant harms with which such products are associated.
The harmonisation of consumer law in Europe has been an important objective within the EU. Efforts have focused not only on improving the functioning of the internal market, but also on securing a high level of consumer protection in the Member States. With regard to consumer contracts, the Unfair Contract Terms Directive has come to play a key role, not least due to the case law of the European Court of Justice in this area in recent years. This article examines the need for an unfairness test of standard contracts and argues that the directive can be expanded to also include individually negotiated contract terms, and terms that relate to the main subject matter of the contract, the adequacy of the price, and changed circumstances. Such amendments would result in a greater correspondence between EU law and Swedish and Nordic law. Although full harmonisation is not possible in the short term, I will argue that a revision should point in this direction. However, I will begin my account with a presentation of the directive and how it has been implemented in Swedish law.
The recent book Consumer Theories of Harm is an important contribution to consumer policy. It is the first attempt to develop theories of harm for consumer law. This essay presents the main arguments of the book (Sections 1 and 2). There are four archetypal scenarios of harm that consumer law should consider: the scam, the lemon, the shock, and the subsidy. Section 3 critically engages with the normative foundations of the analysis. Section 4 proposes to consider the shock scenario, one of the four archetypal scenarios of harm proposed by the book as the benchmark against which assess the other three scenarios. Section 5 shows the importance of searching the theories of harm latent in legislation by showing that ancillary terms in standard terms and conditions are understood by the Unfair Contract Terms Directive as an instance of the scam scenario, not of the shock scenario as proposed by the authors. Finally, Section 6 proposes additional lines of inquiry stimulated by Consumer Theories of Harm.
Many legal problems are caused by misunderstandings. People do not read complex documents. Even if they do, they may not find what they look for or understand what they find. This chapter shows how proactive legal care can help, not only to deal with challenges of complex legal information, but also to improve access to justice and prevent unnecessary problems. Enhancing clients’ self-care by promoting their legal literacy is a central strategy for this purpose. Changing how documents are framed and presented is another. We propose a new mindset for lawyers, with a focus on the users and on using the law for the advancement of the common good. With this mindset, it becomes natural to look for skills and tools to present legal information in more engaging and actionable ways. Design patterns offer a way to identify and share such tools, for the benefit of lawyers and clients alike.
The chapter draws on the legal, institutional and stakeholder perspectives to develop a septet framework that provides clarity to the concept of sustainable consumption and production and aligns consumer protection to sustainable development in developing countries. This contextualises the roles of consumers and corporations as institutional actors and consumption as an institution. The chapter uniquely unbundles the concept as consisting of six foundational components: sustainable consumption by proximate consumers for future generations; sustainable production for future generations; sustainable consumption by/for proximate consumers; sustainable production for proximate consumers; participation by proximate consumers; and CSR. The septet framework challenges conventional approaches to consumer vulnerability, disclosure regulation, contract law, consumer responsibilisation, stakeholder, corporate governance, institutional voids and international cooperation. The chapter’s interventionist consumer protection law approach includes public interest-oriented disclosure regulation, distributive justice-oriented contract law, resolution of business-to-consumer information asymmetry, credible corporate social reporting and certification standards, distributed/shared consumer responsibilisation, stakeholder enforcement rights, obligations and protection, independent stakeholder determination of standards, resolution of related agency problems through a stakeholder approach to corporate governance and international cooperation in regulatory standards and enforcement. It is also argued that a consumer protection approach to sustainable development can promote stakeholder engagement and meaningful corporate social responsibility.
This article explores the role of law in the expansion of home ownership and the protection from over-indebtedness through mortgage loans. We will see that the access-dimension of law, which deals with broadening financial inclusion of consumers into financial markets, is more developed than its protective dimension, which is to protect those consumers from over-indebtedness. A case in point is the seminal Aziz case of the Court of Justice of the European Union (CJEU). It shows that financial inclusion is a fallacious concept, if not accompanied by means to protect from inherent risks. In the end, the goal of financial and social inclusion and the democratization of credit is not achieved and home ownership is put at risk. While emphasis of this article lies on the EU legal framework, it concludes with a few comparative remarks on Chilean law in order to answer the question: what would have happened to Mohammed Aziz if he was Chilean?
Since its inception, the regulation of standard-form contracts has used an essential legal tool that has finally
become the main and most widely used legal technique to protect the consumer: mandated disclosures.
However, based on empirical studies and analyses, the failure of mandated disclosures as an element of
rebalancing has been evident for years. The reasons for this failure can be found not only in a certain way of
actual use or materialization of contractual information, but also and above all in the addressee of the
information (the adherent) who surprisingly does not read it for various reasons that are dealt with in this
article. The manner and state in which the consumer deals with the information in the contract particulars
is at the root of that lack of reading.
The quantity and complexity of these data and their peculiar language are phenomena that are not ignored
either by the doctrine or by the legislator itself, who has embarked on a path towards simplifying the
obligatory information that professionals must transmit.
However, mandated disclosures have not only been revealed as an inefficient instrument but also a hindrance
to the function that other consumer protection tools are called upon to perform.
The newly adopted EU General Data Protection Regulation 2016/679 (GDPR) has explicitly recognised that children deserve more protection than adults, especially online. Yet, as the GDPR’s child-specific protection regime is new and without precedent in Europe, both its underlying logic and its practical implementation remain unclear. The chapter explores the extent to which EU consumer law, which has already taken account of children as a particularly vulnerable group of consumers, can inform the newly adopted General Data Protection Regulation. The analysis focuses on the reasons justifying the child-specific protection regime, principles (fairness, transparency) in relation to children and conceptual questions (definition of an average child and services directed to children).
Conveying food information to consumers is a complex issue given both the vast array of European consumers, as well as the threefold purpose of the display of food information: it is required to communicate about the safety of a product and its ingredients, it assists consumers in making informed choices, and it is also a tool that may have an impact on the functioning of the internal market.
This chapter assesses whether nudging techniques can be argued to be a less restrictive but equally effective way to regulate diets in EU law, when contrasted to classical information-related or content-related regulation. It has been argued that nudging techniques, due to their freedom-preserving nature, might influence the proportionality test in such a way that authorities need to give preference to nudging techniques over content-related or information regulation. We will illustrate on the example of EU food law how behavioural sciences have first altered the EU food law’s goal from the mere provision of safety to also steering behaviour towards healthier diets. In line with this development, the regulatory toolbox advanced beyond the traditional dichotomy of content-related vs. information-related regulation, eventually adding nudging as a third way to regulate. Drawing on previous works of legal scholars we will then present the hypothesis that nudging techniques, according to their choice preserving nature on the one hand and steering character on the other, may be less restrictive but equally effective when contrasted with information-related or content-related regulation. With reference to recent CJEU case law that such a claim would better be backed up by scientific evidence, we will evaluate several nudging studies in the area of food that test the effectiveness of this approach. We will illustrate that, while nudging indeed has a choice-preserving nature and therefore might be less restrictive, it may also be classified under certain circumstances equally effective to information-related regulation. The EU judiciary has introduced an interpretation of the proportionality principle which requires a general preference for information-related rules. The evidence presented, however, may call for a different interpretation of the proportionality principle in some cases to the end that it may require policy makers in the EU to primarily use nudges instead of information-related regulation.
Consumatori e istituzioni considerano l’etichetta come una sorta di bussola indispensabile ai fini dell’orientamento nell’acquisto dei prodotti alimentari. Tuttavia, le informazioni che quest’ultima include, pur essendo veritiere, non sempre lo permettono, perché le indicazioni obbligatorie, di per sé o nell’interazione con le indicazioni facoltative, con la pubblicità o con il bagaglio identitario e cognitivo dei consumatori, possono veicolare messaggi allusivi, impliciti e fuorvianti.
Il presente articolo intende analizzare i processi rappresentativi e volitivi sottostanti alla scelta di acquisto, che nel caso specifico assume caratteristiche sue proprie in ragione del bene oggetto del contratto e delle condizioni in cui questo si conclude. Inoltre, si propone di indagare l’interferenza del professionista nel processo decisionale del consumatore, attraverso lo studio di alcuni casi che mettono in evidenza i limiti intrinseci dell’etichetta come strumento informativo.
Before the behavioural turn, the economic account of consumer policy concerns was too optimistic and reductive. After the turn, we, the consumers, are more likely to need from an economic perspective a more intrusive consumer policy. This is the dismality thesis defended in this article. The dismality thesis is a theoretical, comparative, and argumentative thesis, albeit normatively incomplete. It follows from two premises. First, pre-behavioural economics elaborated a restricted theory of consumer harm in unregulated markets (“consumer harm premise”) and, second, it overstated the effectiveness of information disclosure as a means of consumer policy (“institutional premise”). The dismality thesis is further supported by a comparison of the discussion of attributes control in the pre- and post-behavioural turn literature and by commenting on the main source of controversy about attributes control in the post-turn literature, the so-called “artificial truncation” of behavioural analysis.
Questions can be raised as to the main themes in relation to the consumer benchmarks in the Unfair Commercial Practices Directive. Firstly, it initially appears that the nature of the average consumer benchmark
is unclear. Although the benchmark with its reference to the ‘average’ seems to reflect behaviour of the actual average of consumers or an abstraction thereof, the CJEUs case law indicates that the expected behaviour of the average consumer, at least in part, also reflects desired behaviour. Secondly, a question that should be addressed is what is expected of the average consumer in terms of being ‘reasonably informed, observant and circumspect’. Thirdly, as has been mentioned above, it is unclear under what circumstances the target group and vulnerable group benchmarks can be applied, and how these benchmarks relate to one another. Fourthly, also the relevance of social
, cultural and linguistic factors raises questions. Fifthly and finally, questions can be raised in relation to the possibility for courts and enforcement authorities to use empirical evidence in determining the expected behaviour of the consumer.
The Unfair Commercial Practices Directive was adopted in 2005 and fully harmonises unfair commercial practices law in Europe. It aims to achieve a high level of consumer protection, to smoothen the functioning of the internal market and to increase competition in the market as such. The main consumer benchmark in the Directive is that of the average consumer, introduced by the CJEU in 1998. The Unfair Commercial Practices Directive introduced two alternative benchmarks to that of the average consumer, i.e., the target group benchmark and the vulnerable group benchmark. The latter was introduced specifically to take away the criticism that the Directive offered insufficient protection to consumers. Both the target group benchmark and the vulnerable group benchmark aim to offer additional protection to more vulnerable groups. Under what circumstances the two alternative benchmarks can be applied, remains somewhat unclear on the basis of the Directive. However, the requirements for their application emphasise that they remain exceptions to the main benchmark of the Directive, i.e., the average consumer benchmark.
There are two general assumptions underlying the average consumer benchmark as applied by the CJEU. Firstly, the CJEU has a tendency towards viewing the average consumer as a rational decision-maker. This assumption is highly problematic from a behavioural perspective, as many studies have shown that consumers often do not act rationally. People have difficulty dealing with complex or large amounts of information and consumer decision-making is often flawed because of so-called biases. Secondly, the average consumer benchmark has as a basis the assumption that consumers behave similarly, and that the average consumer benchmark, therefore, more-or-less accurately represents ‘standard consumer behaviour’. Similar to the rationality assumption, this assumption is problematic from the point of view of consumer behaviour. Consumers in many ways differ from one another in their decision-making, making it difficult to work with the concept of an average consumer. For example, consumers significantly differ in terms of pre-existing knowledge and the degree of involvement consumers have with specific products. Also differences in personality and culture create significant differences in behaviour between consumers.
The consumer benchmarks in the Directive present significant shortcomings in terms of all of the Directive’s goals. In relation to the goal of achieving a high level of consumer protection this follows from the fact that the average consumer benchmark focuses on protection of the average rather than the sub-average consumer and from the fact that that the application of the average consumer benchmark by the CJEU imposes high expectations as to the average consumer’s behaviour. Although the target group and vulnerable group benchmarks were meant to provide additional protection, their potential to do so is limited. As to the objective to increase the smooth functioning of the internal market
, the benchmarks so far fail to remove barriers to trade. Although Germany, England and Italy have all adopted the CJEUs average consumer benchmark, none of them follow the strict interpretation of the average consumer benchmark of the CJEU. Moreover, there are still significant differences between the application of the consumer benchmarks in the Member States investigated. This also presents problems in terms of consumer confidence, as the idea is that this should improve with uniform protection throughout Europe. Moreover, consumer confidence
is not likely to benefit from the shortcomings in terms of the level of protection of the consumer benchmarks as have been identified above. In relation to improving competition, the regime of consumer benchmarks in the Directive is generally effective in preventing over-protection
. However, in terms of preventing unfair practices that harm competition, the Directive’s regime of consumer benchmarks is less effective.
As shown in the previous chapter, the debt-collecting industry in America has been under continuous expansion and development, strongly fueled by the higher degree of unemployment and the increasing number of bankruptcies generated by economic crises. The proportions reached and the large numbers involved have brought from the very beginning a myriad of devious and abusive collection practices, in particular harassment (at home or at the work place), impersonation of lawyers or law officers by collectors, use of false documents or physical threats.
Economic analysis of law usually proceeds under the assumptions of neoclassical economics. But empirical evidence gives much reason to doubt these assumptions; people exhibit bounded rationality, bounded self-interest, and bounded willpower. This article offers a broad vision of how law and economics analysis may be improved by increased attention to insights about actual human behavior. It considers specific topics in the economic analysis of law and proposes new models and approaches for addressing these topics. The analysis of the article is organized into three categories: positive, prescriptive, and normative. Positive analysis of law concerns how agents behave in response to legal rules and how legal rules are shaped. Prescriptive analysis concerns what rules should be adopted to advance specified ends. Normative analysis attempts to assess more broadly the ends of the legal system: Should the system always respect people's choices? By drawing attention to cognitive and motivational problems of both citizens and government, behavioral law and economics offers answers distinct from those offered by the standard analysis.
In an experimental investigation of the effects of information load on consumer decision making, respondents experienced information overload when they were provided with 10, 15, 20, or 25 choice alternatives or with information on 15, 20, or 25 attributes. Alternative measures of the dependent variable yielded similar results, thus enhancing confidence in these findings.
The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice. Often people's preferences are ill-formed, and their choices will inevitably be influenced by default rules, framing effects, and starting points. In these circumstances, a form of paternalism cannot be avoided. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists should attempt to steer people's choices in welfare-promoting directions without eliminating freedom of choice. It is also possible to show how a libertarian paternalist might select among the possible options and to assess how much choice to offer. Examples are given from many areas, including savings behavior, labor law, and consumer protection.
This exciting volume marks the birth of a new field, one which attempts to study law with reference to an accurate understanding of human behavior. It reports new findings in cognitive psychology which show that people are frequently both unselfish and over-optimistic; that people have limited willpower and limited self-control; and that people are 'boundedly' rational, in the sense that they have limited information-processing powers, and frequently rely on mental short-cuts and rules of thumb. Understanding this behavior has large-scale implications for the analysis of law, in areas including environmental protection, taxation, constitutional law, voting behavior, punitive damages for civil rights violations, labor negotiations, and corporate finance. With a better knowledge of human behavior, it is possible to predict the actual effects of law, to see how law can promote society's goals, and to reassess the questions of what law should be doing.
In recent years, legal scholars dissatisfied with the behavioral assumptions of the rational actor model have increasingly turned to the findings of cognitive psychologists and decision theorists to enhance the accuracy of efficiency analysis. Jon Hanson and Douglas Kysar review those findings in this Article, concluding that scholars have been well justified in incorporating the behavioralist account of human behavior into law and economics. Nevertheless, Hanson and Kysar argue that those scholars simultaneously have failed to take the findings of behavioral research to their logical conclusion. Using the scholarly application of behavioralist insights to products liability theory as an example, the authors demonstrate that legal scholars thus far have treated cognitive anomalies as relatively fixed and independent influences on individual decisionmaking. Rather than such an exogenous analysis, Hanson and Kysar advocate an endogenous examination of behavioralist findings that allows for internal, dynamic effects of cognitive biases within the decisionmaking model. By recognizing that cognitive anomalies influence not only the behavior of biased decisionmakers bur also the incentives of other economic actors, Hanson and Kysar reveal the possibility of market manipulation-that is, the possibility that market outcomes can be influenced, if not determined, by the ability of one actor to control the format of information, the framing and presentation of choices, and, more generally, the setting within which market transactions occur. Again using the field of products liability theory as an example, the authors argue that such market manipulation will come to characterize consumer product markets; powerful economic incentives will drive manufacturers to engage in practices that, whether consciously or not, utilize non-rational consumer tendencies to influence consumer preferences and perceptions for gain. The authors conclude by previewing the evidence from their companion article that demonstrates the seriousness of the problem of market manipulation and the need for corrective legal devices such as enterprise liability.
As law and economics turns forty years old, its continued vitality is threatened by its unrealistic core behavioral assumption: that people subject to the law act rationally. Professors Korobkin and Ulen argue that law and economics art reinvigorate itself by replacing the rationality assumption with a more nuanced understanding of human behavior that draws on cognitive psychology, sociology, and other behavioral sciences, thus creating a new, scholarly paradigm called "law, and behavioural science." This article provides an early blueprint for research in this paradigm. The authors first explain the various ways the rationality assumption is used in legal scholarship and why it leads to unsatisfying policy prescriptions. They then systematically examine the empirical evidence inconsistent with the rationality assumption and, drawing on a wide range of substantive areas of law, explain how normative policy conclusions of law and economics will change and improve under the law-and-behavioral-science approach.
The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and desirable for private and public institutions to influence behavior while also respecting freedom of choice. Often people's preferences are unclear and ill-formed, and their choices will inevitably be influenced by default rules, framing effects, and starting points. In these circumstances, a form of paternalism cannot be avoided. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists should attempt to steer people's choices in welfare-promoting directions without eliminating freedom of choice. It is also possible to show how a libertarian paternalist might select among the possible options and to assess how much choice to offer Examples are given from many areas, including savings behavior, labor law, and consumer protection.
Understanding Effective Advertising: How, When, and Why Advertising Works reviews and summarizes an extensive body of research on advertising effectiveness. In particular, it summarizes what we know today on when, how, and why advertising works. The primary focus of the book is on the instantaneous and carryover effects of advertising on consumer choice, sales, and market share. In addition, the book reviews research on the rich variety of ad appeals, and suggests which appeals work, and when, how, and why they work. The first comprehensive book on advertising effectiveness, Understanding Effective Advertising reviews over 50 years of research in the fields of advertising, marketing, consumer behavior, and psychology. It covers all aspects of advertising and its effect on sales, including sales elasticity, carryover effects, content effects, and effects of frequency. Author Gerard J. Tellis distills three decades of academic and professional experience into one volume that successfully dismisses many popular myths about advertising.
Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.
This chapter exposes the tensions that afflict the shaping of European Union (EU) consumer law and policy and demonstrates that the relationship between EU and national consumer law is dynamic and not always coherent. A-Punkt Schmuckhandels provides a good example of what it means to treat consumer protection as a shared competence. EU free movement law confines trade-restrictive national measures to the area within which they can be justified, but it does not insist on their inevitable elimination. EU consumer policy in its legislative dimension is predominantly the product of Article 114 Treaty on the Functioning of the European Union (TFEU), which succinctly deals with harmonization. EU consumer law and the project of market integration are intimately connected. Indeed, market integration is intended to yield beneficial effects for the consumer by improving competition and widening choice.
German consumers are not really like the image that the German courts present. The portrait of a helpless, debilitated, immature creature who is in need of protection so as not to be led astray by advertising is not accurate. The European Court of Justice paints the average buyer as sensible, attentive and cautious, as well as possessing the ability to analyse the message behind advertising. So, in fact, the German consumer is awake and responsive to European developments. What is needed is a balance between market freedom and the protection of consumers; including a high availability of information for these potential buyers. When the consumer is adequately informed he/she will then be in the position to reap the full benefits of a single European market. But market access is crucial. With the growth of market access and information the subsequent behaviour of the potential consumers is determined by their ability to make rational decisions once given all the information. The availability of consumer information is twofold when applied to regulating the market: the autonomy of consumers becomes the mechanism for reconciling the market freedom rights of manufacturers; and the right that the buyer possesses to have their economic interests protected.
It has become a truism that brand marketing is in the business of selling emotional connections rather than product benefits. Because of the relatively small number of primary emotions, however, brands in the same categories often end up standing for the same sort of emotions. Let us face facts: telecoms brands either connect or empower people; most whisky brands tend to occupy the emotional territories of maturity or discernment; cleaning product brands have at their core the idea of the good carer, be it mother/father/spouse/self; many vodka and pre-mix vodka brands play within the territory of transgression. Therefore, the key questions to ask about these brands are: What kind of connecting or empowerment? What kind of maturity? What kind of carer? What kind of transgression? It is this specific differentiated expression within an emotional territory that makes the difference between success and failure for brands. This paper highlights a different approach to exploring these emotional territories through using research stimulus (called Brandcepts) that can actively help respondents to make the sort of fine distinctions in the world of emotional territories that they would never be able to make on their own.
Perhaps the simplest and the most basic qualitative law of probability is the conjunction rule: The probability of a conjunction,
P(A&B), cannot exceed the probabilities of its constituents,
P(A) and
P(B), because the extension (or the possibility set) of the conjunction is included in the extension of its constituents. Judgments under uncertainty, however, are often mediated by intuitive heuristics that are not bound by the conjunction rule. A conjunction can be more representative that one of its constituents, and instances of a specific category can be easier to imagine or to retrieve than instances of a more inclusive category. The representativeness and availability heuristics therefore can make a conjunction appear more probable than one of its constituents. This phenomenon is demonstrated in a variety of contexts, including estimation of word frequency, personality judgment, medical prognosis, decision under risk, suspicion of criminal acts, and political forecasting. Systematic violations of the conjunction rule are observed in judgments of lay people and of experts in both between- and within-Ss comparisons. Alternative interpretations of the conjunction fallacy are discussed, and attempts to combat it are explored. (48 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Commercial practices between businesses and consumers within the internal market are benefited today by a uniform set of rules: Council Directive 2005/29/EC ('Commercial Practice Directive' hereinafter'). The Commercial Practices Directive fully harmonises measures seeking to curb unfair commercial practices harmful to the economic interests of consumers. Furthermore, the Commercial Practices Directive pursues the double aim of contributing to the smooth functioning of the internal market, and providing consumers a high level of protection. This paper first outlines the limited scope of the Commercial Practices Directive, its general prohibition, its notion of misleading and aggressive practice, and its failure to address fully the potential of codes of conduct in the field of unfair commercial practice. Secondly, this paper analyzes the developing notion of an 'average consumer,' and how it will play a pivotal role in the application of the Commercial Practices Directive. Finally, the US experience with fair trade laws is examined with some concluding, remarks on the relationship between the consumer, competion, and unfair practice laws.
As law and economics turns 40 years old, its continued vitality is threatened by its unrealistic core behavioral assumption: that people subject to the law act rationally. Professors Korobkin and Ulen argue that law and economics can reinvigorate itself by replacing the rationality assumption with a more nuanced understanding of human behavior that draws on cognitive psychology, sociology and other behavioral sciences, thus creating a new scholarly paradigm called "law and behavioral science". This article provides an early blueprint for research in this paradigm. The authors first explain the various ways the rationality assumption is used in legal scholarship, and why it leads to unsatisfying policy prescriptions. They then systematically examine the empirical evidence inconsistent with the rationality assumption and, drawing on a wide-range of substantive areas of law, explain how normative policy conclusions of law and economics will change and improve under the law-and-behavioral-science approach.
The role of individuals' affective state on information processing and decision making has attracted the attention of researchers in the social sciences. Building on the findings reported in the literature, the authors examine the effects of mood on marketing practice. Implications for advertising practices as well as the potential manipulation of elements of the physical store/retail environment (atmospherics) in which consumers operate in order to affect behaviour are discussed. Copyright © 2004 Henry Stewart Publications.
This article described three heuristics that are employed in making judgements under uncertainty: (i) representativeness, which is usually employed when people are asked to judge the probability that an object or event A belongs to class or process B; (ii) availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development; and (iii) adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available. These heuristics are highly economical and usually effective, but they lead to systematic and predictable errors. A better understanding of these heuristics and of the biases to which they lead could improve judgements and decisions in situations of uncertainty.
This paper explores a judgmental heuristic in which a person evaluates the frequency of classes or the probability of events by availability, i.e., by the ease with which relevant instances come to mind. In general, availability is correlated with ecological frequency, but it is also affected by other factors. Consequently, the reliance on the availability heuristic leads to systematic biases. Such biases are demonstrated in the judged frequency of classes of words, of combinatorial outcomes, and of repeated events. The phenomenon of illusory correlation is explained as an availability bias. The effects of the availability of incidents and scenarios on subjective probability are discussed.
This article described three heuristics that are employed in making judgements under uncertainty: (i) representativeness,
which is usually employed when people are asked to judge the probability that an object or event A belongs to class or process
B; (ii) availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a
class or the plausibility of a particular development; and (iii) adjustment from an anchor, which is usually employed in numerical
prediction when a relevant value is available. These heuristics are highly economical and usually effective, but they lead
to systematic and predictable errors. A better understanding of these heuristics and of the biases to which they lead could
improve judgements and decisions in situations of uncertainty.
This paper argues for the recognition of important experiential aspects of consumption. Specifically, a general framework is constructed to represent typical consumer behavior variables. Based on this paradigm, the prevailing information processing model is contrasted with an experiential view that focuses on the symbolic, hedonic, and esthetic nature of consumption. This view regards the consumption experience as a phenomenon directed toward the pursuit of fantasies, feelings, and fun.
A synthesis of research on consumers' prepurchase behavior suggests that a substantial proportion of purchases does not involve decision making, not even on the first purchase. The heavy emphasis in current research on decision making may discourage investigation of other important kinds of consumer behavior.
The study of heuristics and biases in judgement has been criticized in several publications by G. Gigerenzer, who argues that "biases are not biases" and "heuristics are meant to explain what does not exist" (1991, p. 102). The article responds to Gigerenzer's critique and shows that it misrepresents the authors' theoretical position and ignores critical evidence. Contrary to Gigerenzer's central empirical claim, judgments of frequency--not only subjective probabilities--are susceptible to large and systematic biases. A postscript responds to Gigerenzer's (1996) reply.
Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to various hypothetical decision situations under risk and shows results that violate the tenets of expected utility theory. People overweight outcomes considered certain, relative to outcomes that are merely probable, a situation called the "certainty effect." This effect contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses. In choices where gains are replaced by losses, the pattern is called the "reflection effect." People discard components shared by all prospects under consideration, a tendency called the "isolation effect." Also shows that in choice situations, preferences may be altered by different representations of probabilities. Develops an alternative theory of individual decision making under risk, called prospect theory, developed for simple prospects with monetary outcomes and stated probabilities, in which value is given to gains and losses (i.e., changes in wealth or welfare) rather than to final assets, and probabilities are replaced by decision weights. The theory has two phases. The editing phase organizes and reformulates the options to simplify later evaluation and choice. The edited prospects are evaluated and the highest value prospect chosen. Discusses and models this theory, and offers directions for extending prospect theory are offered. (TNM)
Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM), judgement of the I-5141; El Corte Ingles, SA v. Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM), judgement of the ECJ of 11
- Procter
- Gamble
- Company
Procter & Gamble Company v. Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM), judgement of the ECJ 29 April 2004, joined cases C-473/01 and C-474/01, ECR, 2004, I-5141; El Corte Ingles, SA v. Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM), judgement of the ECJ of 11 November 2004, joined cases T-183/02 and T-184/02, ECR, 2004, II-965.
Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM), judgement of the Court of First Instance (Fifth Chamber) of 23 Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM) v. Erpo Mö belwerk GmbH, judgement of the ECJ of 21
- See Co
- Kg
See Frischpack GmbH & Co. KG v. Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM), judgement of the Court of First Instance (Fifth Chamber) of 23 November 2004, case T-360/03; Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM) v. Erpo Mö belwerk GmbH, judgement of the ECJ of 21 October 2004, case C-64/ 02, ECR, 2004, I-10031; New Look Ltd, supra fn.
Locating the average consumer: His judicial origins, intellectual influences and current role in European trade mark law
- J Davis
- J. Davis
Legal constructions of the consumer The making of the consumer, knowledge, power and identity in the modern world
- M Everson
Unfair commercial practices directive - A missed opportunity? Paper presented at the Regional Consumer Law Conference organized by the Consumer Affairs Council of Malta and the International Association of Consumer Law
- G Howells
The social psychology of consumer behaviour (applying social psychology)
- R P Bagozzi
- Z Gurhan-Canli
- J R Priester
- R. P. Bagozzi
Comparative law and the cognitive revolution
- R Caterina
- R. Caterina
Labelling: Competitiveness, consumer information and better regulation for the EU Brussels: European Commission
- European Commission
The total harmonization trickery - special reference to directive 2005/29/CE. Paper presented at the Regional Consumer Law Conference of the Consumer Affairs Council of Malta and the International Association of Consumer Law
- J Pegado Liz
The role of the informed consumer in European community law and policy
- S Weatherill
- S. Weatherill
Understanding consumer decision making: A means-end approach to marketing and advertising strategy
- Reynolds T J Olson
An analysis of the application and scope of the unfair commercial practices directive: A report for the UK Department of Trade and Industry
- C Twigg-Flesner
- D Parry
- G Howells
- A Nordhausen
- H W Micklitz
- J Stuyck
Adolf Darbo AG, judgement of the Court of First Instance (First Chamber
- Verein Gegen Unwesen In Handel Und Gewerbe Kö Ln V
Verein gegen Unwesen in Handel und Gewerbe Kö ln v. Adolf Darbo AG, judgement of the Court
of First Instance (First Chamber) of 4 April 2000, case C-465/98, ECR, 2000, I-2297, § 22.