No CrossRef data available.
Article contents
Cooling off periods in franchise contracts: from consumer protection mechanisms to paternalistic remedies for behavioral biases
Published online by Cambridge University Press: 20 January 2017
Abstract
The “cooling-off period” has remained a fixture of domestic consumer-protection legislation. Yet, as I argue in this paper, the longevity of these provisions is neither the result of their effectiveness at solving the problems they were intended to solve nor the forces of path dependence. Rather, I suggest that the cooling-off period has endured because of a process of gradual ideational adaptation. Over the course of the 20th century, legal and economic intellectuals advising government agencies have abandoned traditional consumer-protection rationales that led to the creation of cooling-off periods in favor of a paternalistic policy orientation that integrates behavioral science insights. Though the organizational problems the cooling-off period were expected to resolve have been more effectively addressed through the concurrent institution of other protective measures, such as the disclosure document and compulsory advisory provisions, the cooling-off period has found new uses and advocates, which have made it far from obsolete.
- Type
- Research Articles
- Information
- Copyright
- Copyright © V.K. Aggarwal 2015 and published under exclusive license to Cambridge University Press
References
Asker, John. 2000. “Bidding Up, Buying Out and Cooling-Off: An Examination of Auctions with Withdrawal Rights.” Economic Theory
16 (3): 585–611.Google Scholar
Black, William K.
2010. “How Trust Is Abused in Free Markets: Enron's “Crooked ‘E’.”, January 14. Accessed January 12, 2015. Available from: <http://ssrn.com/abstract=1536532> or <http://dx.doi.org/10.2139/ssrn.1536532>. or .' href=https://dx.doi.org/10.2139/ssrn.1536532>CrossRef or .' href=https://scholar.google.com/scholar?q=Black,+William+K.+2010.+“How+Trust+Is+Abused+in+Free+Markets:+Enron's+“Crooked+‘E’.”,+January+14.+Accessed+January+12,+2015.+Available+from:++or+.>Google Scholar
Bühring-Uhle, Christian, Kirchhoff, Lars, and Scherer, Gabriele. 2006. Arbitration and Mediation in International Business. The Netherlands: Kluwer Law International.Google Scholar
Camerer, Colin, Issacharoff, Samuel, Loewenstein, George, O'Donoghue, Ted, and Rabin, Matthew. 2003. “Regulation for Conservatives: Behavioral Economics and the Case for ‘Asymmetric Paternalism’.” University of Pennsylvania Law Review
151: 1211–1254.Google Scholar
Cardella, Eric, and Chiu, Ray. 2012. “Stackelberg in the Lab: The Effect of Group Decision Making and ‘Cooling-Off’ Periods.” Journal of Economic Psychology
33 (6): 1070–1083.Google Scholar
Cohen, Lizabeth. 2010. “Colston E. Warne Lecture: Is It Time for Another Round of Consumer Protection? The Lessons of Twentieth-Century U.S. History.” Journal of Consumer Affairs
44 (1): 234–246.Google Scholar
Ebejer, James M., and Morden, Michael J.
1988. “Paternalism in the Marketplace: Should a Salesman Be His Buyer's Keeper?” Journal of Business Ethics
7 (5): 337–339.Google Scholar
Frazer, Lorelle, Weaven, Scott, and Bodey, Kelli. 2012. Franchising Australia 2012. The Franchise Council of Australia, Asia-Pacific Centre for Franchising Excellence, Griffith University, Brisbane.Google Scholar
Gans, Joshua. 2005. “Protecting Consumers by Protecting Competition: Does Behavioural Economics Support This Contention?” Competition and Consumer Law Journal
13 (1): 40–50.Google Scholar
Gneezy, Uri, and List, John A.
2006. “Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments.” Econometrica
74 (5): 1365–1384.Google Scholar
Hendrikse, George, and Windsperger, Josef. 2011. Determinants of Contractual Completeness in Franchising. Berlin Heidelberg: Physica-Verlag HD.Google Scholar
Hinds, M.
1982. “Laissez-Faire Consumerism.” New York Times, August 21 in Cohen, L. 2010. “Colston E. Warne Lecture: Is It Time for Another Round of Consumer Protection? The Lessons of Twentieth-Century US History.” Journal of Consumer Affairs 44 (1): 234–246.Google Scholar
Hondius, Ewoud. 2004. “The Protection of the Weak Party in a Harmonised European Contract Law: A Synthesis.” Journal of Consumer Policy
27 (3): 245–251.Google Scholar
Howells, Geraint. 2005. “The Potential and Limits of Consumer Empowerment by Information.” Journal of Law and Society
32 (3): 349–370.Google Scholar
Jolls, Christine, Sunstein, Cass R., and Thaler, Richard. 1998. “A Behavioral Approach to Law and Economics.” Stanford Law Review
50: 1471–1550.Google Scholar
Kahneman, Daniel, and Tversky, Amos. 1979. “Prospect Theory: An Analysis of Decision under Risk.” Econometrica: Journal of the Econometric Society
47: 263–291.Google Scholar
Kahneman, Daniel. 2003. “A Perspective on Judgment and Choice: Mapping Bounded Rationality.” American Psychologist
58 (9): 697.Google Scholar
Keating. 2013. “The Nudgy State,” Foreign Policy
http://foreignpolicy.com/2013/01/02/the-nudgy-state/ Accessed January 2, 2015.Google Scholar
Kirkwood, John B., and Lande, Robert H.
2008. “Fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency.” Notre Dame Law Review
84: 191.Google Scholar
Korobkin, Russell B., and Ulen, Thomas S.
2000. “Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics.” California Law Review
88 (4): 1051–1144.Google Scholar
Kronman, Anthony T.
1982. “Paternalism and the Law of Contracts.” Yale Law Journal
92: 763.Google Scholar
Lords Sitting (England). 1964. Hire-Purchase (No. 2) Bill [H.L.], February 4, 1964. <http://hansard.millbanksystems.com/lords/1964/feb/04/hire-purchase-no-2-bill-hl>..>Google Scholar
Mahoney, James, and Thelen, Kathleen. 2010. “A Theory of Gradual Institutional Change.” In Explaining Institutional Change: Ambiguity, Agency, and Power, edited by Mahoney, James and Thelen, Kathleen, 1–37. Cambridge: Cambridge University Press.Google Scholar
McLean, Janet. 1996. “Contracting in the Corporatised and Privatised Environment.” Public Law Review
7: 223.Google Scholar
Mullainathan, Sendhil, and Thaler, Richard H.
2000. “Behavioral Economics.” National Bureau of Economic Research, Working Paper 7948.Google Scholar
Oechssler, Jörg, Roider, Andreas, and Schmitz, Patrick. 2008. “Cooling-Off in Negotiations-Does It Work?” London, Centre for Economic Policy Research. Accessed November 19, 2014. <http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6807>.Google Scholar
Olldashi, Enkeleda, and Xhaferri, Zamira. 2011. “The Cooling-off Period from a Law and Economic Perspective.” Revista Shqiptare per Studime Ligjore
2: 154–160.Google Scholar
Ottow, Annetje T.
2014. “Erosion or Innovation? The Institutional Design of Competition Agencies – A Dutch Case Study.” Journal of Antitrust Enforcement
2 (1): 25–43.Google Scholar
Ramsay, Iain. 2006. “Consumer Law, Regulatory Capitalism and the New Learning in Regulation.” Sydney Law Review
28: 9–35.Google Scholar
Rekaiti, Pamaria, and Van den Bergh, Roger. 2000. “The Cooling-off Period in the Consumer Laws of the EC Member States. A Comparative Law and Economics Approach.” Journal of Consumer Policy
23 (4): 371–408.Google Scholar
Rogers v. Higgins, 48 II 1. 21 1, 217 (1868).Google Scholar
Sher, Byron D.
1967. “Cooling-Off Period in Door-to-Door Sales.” UCLA Law Review
15: 717.Google Scholar
Smits, Jan M.
2010. “Rethinking the Usefulness of Mandatory Rights of Withdrawal in Consumer Contract Law: The Right to Change Your Mind.” Penn State International Law Review
29: 671.Google Scholar
Souren, Claire. 2006. The Efficiency of a Cooling-off Period. Erasmus Programme European Master in Law and Economics, 2005–2006.Google Scholar
Spencer, Elizabeth C.
2008. “Conditions for Effective Disclosure in the Regulation of Franchising.” International Review of Applied Economics
22 (4): 509–525.Google Scholar
Taibbi. 2012. The Complete Story Of How Wall Street Killed Financial Regulation In 5 Terrifying Steps. Rolling Stone, May 10, 2012. <http://www.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510> Accessed November 17, 2014.+Accessed+November+17,+2014.>Google Scholar
Thaler, Richard H., and Sunstein, Cass R.
2003. “Libertarian Paternalism.” American Economic Review
93 (2): 175–179.Google Scholar
Thaler, Richard H., and Sunstein, Cass R.
2008. Nudge. Improving Decisions about Health, Wealth and Happiness. Newhaven CT: Yale University Press.Google Scholar
Thelen, Kathleen. 2014. Varieties of Liberalization and the New Politics of Social Solidarity. Cambridge, England: Cambridge University Press.Google Scholar
Thomas, Matthew, and Buckmaster, Luke. 2010. Paternalism in Social Policy: When Is It Justifiable? Parliamentary Library (Australia). Accessed November 19, 2014. <http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fprspub%2F433029%22>..>Google Scholar
Tversky, Amos, and Kahneman, Daniel. 1974. “Judgment under Uncertainty: Heuristics and Biases.” Science
185 (4157): 1124–1131.Google Scholar
Jr, Walker, Orville, C., and Ford, Neil M.
1970. “Can ‘Cooling-Off Laws’ Really Protect the Consumer?” The Journal of Marketing
34 (2): 53–58.Google Scholar
White, James J., and Summers, Robert Samuel. 1972. Handbook of the Law under the Uniform Commercial Code. St. Paul: West Publishing Company.Google Scholar
Williamson, Oliver E.
1975. Markets and Hierarchies: Antitrust Analysis and Implications. Markets and Hierarchies: Antitrust Analysis and Implications. New York: The Free Press.Google Scholar
Williamson, Oliver E.
1985. The Economic Institutions of Capitalism. New York: Simon and Schuster.Google Scholar
Wright, Joshua. 2012. “The Antitrust/Consumer Protection Paradox: Two Policies at War with Each Other.” Yale Law Journal
121: 2216–2405.Google Scholar
Wright, Joshua D., and Ginsburg, Douglas H.
2012. “Behavioral Law and Economics: Its Origins, Fatal Flaws, and Implications for Liberty.” Northwestern University Law Review
106: 1033.Google Scholar
Zhang, Yun. 2011. The Information Imbalance in the Franchising Relationship: A Best Practice Model for Prior Disclosure and an Evaluation of China's Regulatory Regime, 2008–2011. Ph.D. diss. University of New South Wales, Australia.Google Scholar