Does anyone read the fine print? Measuring Consumer Attention to Standard Format Contracts

Abstract

A cornerstone of the legal and economic approach to standard form contracts is the “informed minority” hypothesis: in competitive markets, a minority of term-conscious buyers is sufficient to discipline sellers from using unfavorable repetitive terms. This argument is often invoked to limit intervention or regulate consumer transactions, but there has been little empirical research on its validity. We tracked the Internet browsing behavior of 48,154 monthly visitors from 90 online software companies to study the extent to which potential buyers access the associated standard form contract, the end-user license agreement. We found that only one or two out of every thousand retail software buyers choose to access the license agreement, and most of those who do access it spend very little time reading more than a small portion of the text.

KEYWORDS: legal standards, consumer, consumer protection, trade, market.

JEL CODE: K, K12, D63