IDEAS home Printed from https://ideas.repec.org/a/ris/ajotap/0010.html
   My bibliography  Save this article

The Consumer Option Model for Withdrawal Rights in the EU: Analysis of an Alternative Design

Author

Listed:
  • Ranftl, Simone

    (Institute of Civil Law, Foreign Private Law and Private International Law, University of Graz, Austria)

  • Lurger, Brigitta

    (Institute of Civil Law, Foreign Private Law and Private International Law, University of Graz, Austria)

  • Brohmer, Hilmar

    (Institute of Psychology, University of Graz, Austria)

  • Athenstaedt, Ursula

    (Institute of Psychology, University of Graz, Austria)

Abstract

Under EU law, consumers have a mandatory “right of withdrawal” in certain situations. Economic and legal literature raises severe doubts as to its effectiveness and fairness. This article focuses on an alternative design previously discussed in the literature: the “consumer option model.” Under this model, every online consumer can choose between a purchase with the withdrawal right and a purchase without such a right for a slightly lower price. The consumer option model offers mandatory protection and is more consumer-friendly than the removal of all legislative prescriptions – where granting the right would be solely at the businesses' discretion. Within the framework of an experimental study, an inter¬disciplinary team of researchers at the University of Graz examined this alternative design. The 319 study participants, who were Austrian residents, were divided into three groups and purchased two different products in a simulated online shop with or without the right of withdrawal. For these three groups, the right of withdrawal was presented as an opt-out, an opt-in, or a no default choice. Contracts with a right of withdrawal displayed a higher price than contracts without it. The results indicated that consumers were most likely to choose the right of withdrawal when it was presented as an opt-out option and least likely when it was presented to them as an opt-in option. In addition, many subjects indicated that they were not even aware of the given choice in the form of an already set checkmark. Hence, status quo bias as well as framing effects played a role and could influence the consumer decision to conclude the online contract with or without the right of withdrawal, and this independently of any interpersonal differences. Personal dispo¬sitions, such as the regulation focus or the willingness of risk-taking, neither played a role nor did gender or income. Consumer choices differ with the value of the purchased product. The study, thus, revealed the preference of (only) a certain percentage of Austrian consumers to conclude online contracts without a right of withdrawal in exchange for a lower product price (which is currently prevented by EU law). To safeguard free and informed consumer choices, the legislative option model would have to be formulated and offered by the trader in a neutral form, void of any defaults.

Suggested Citation

  • Ranftl, Simone & Lurger, Brigitta & Brohmer, Hilmar & Athenstaedt, Ursula, 2022. "The Consumer Option Model for Withdrawal Rights in the EU: Analysis of an Alternative Design," American Journal of Trade and Policy, Asian Business Consortium, vol. 9(1), pages 23-42.
    • Handle: RePEc:ris:ajotap:0010
    as

    Download full text from publisher

    File URL: https://abc.us.org/ojs/index.php/ajtp/article/view/617
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    3. Omri Ben-Shahar & Eric A. Posner, 2011. "The Right to Withdraw in Contract Law," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 115-148.
    4. Bonifield, Carolyn & Cole, Catherine & Schultz, Randall L., 2010. "Product returns on the Internet: A case of mixed signals?," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1058-1065, September.
    5. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    6. Brooks, Chris & Sangiorgi, Ivan & Hillenbrand, Carola & Money, Kevin, 2019. "Experience wears the trousers: Exploring gender and attitude to financial risk," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 483-515.
    7. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    8. Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
    9. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    10. J. Luzak, 2014. "To Withdraw Or Not To Withdraw? Evaluation of the Mandatory Right of Withdrawal in Consumer Distance Selling Contracts Taking Into Account Its Behavioural Effects on Consumers," Journal of Consumer Policy, Springer, vol. 37(1), pages 91-111, March.
    11. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
    12. Sridhar Moorthy & Kannan Srinivasan, 1995. "Signaling Quality with a Money-Back Guarantee: The Role of Transaction Costs," Marketing Science, INFORMS, vol. 14(4), pages 442-466.
    13. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
    14. Georg Borges & Bernd Irlenbusch, 2007. "Fairness Crowded Out by Law: An Experimental Study on Withdrawal Rights," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(1), pages 84-101, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sven Hoeppner, 2014. "The unintended consequence of doorstep consumer protection: surprise, reciprocation, and consistency," European Journal of Law and Economics, Springer, vol. 38(2), pages 247-276, October.
    2. Sandri, Serena & Schade, Christian & Mußhoff, Oliver & Odening, Martin, 2010. "Holding on for too long? An experimental study on inertia in entrepreneurs' and non-entrepreneurs' disinvestment choices," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 30-44, October.
    3. Jacobs Martin, 2016. "Accounting for Changing Tastes: Approaches to Explaining Unstable Individual Preferences," Review of Economics, De Gruyter, vol. 67(2), pages 121-183, August.
    4. Kurt, Didem & Pauwels, Koen & Kurt, Ahmet C. & Srinivasan, Shuba, 2021. "The asymmetric effect of warranty payments on firm value: The moderating role of advertising, R&D, and industry concentration," International Journal of Research in Marketing, Elsevier, vol. 38(4), pages 817-837.
    5. Erich Renz & Marvin M. Müller & Kim Leonardo Böhm, 2023. "When nudges promote neutral behavior: an experimental study of managerial decisions under risk and uncertainty," Journal of Business Economics, Springer, vol. 93(8), pages 1309-1354, October.
    6. Daniele SCHILIRÒ, 2013. "Bounded Rationality: Psychology, Economics And The Financial Crises," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 4(1), pages 97-108.
    7. Hobman, Elizabeth V. & Frederiks, Elisha R. & Stenner, Karen & Meikle, Sarah, 2016. "Uptake and usage of cost-reflective electricity pricing: Insights from psychology and behavioural economics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 455-467.
    8. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    9. Insaf Bekir & Faten Doss, 2020. "Status quo bias and attitude towards risk: An experimental investigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 827-838, July.
    10. Grüner, S. & Fietz, A., 2014. "Chancen, Grenzen und Barrieren staatlicher Regulierungspolitik – Eine verhaltensökonomische Betrachtung unter Berücksichtigung des individuellen landwirtschaftlichen Unternehmensverhaltens," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    11. Ronald Schettkat, 2018. "Revision or Revolution? A Note on Behavioral vs. Neoclassical Economics," Schumpeter Discussion Papers sdp18005, Universitätsbibliothek Wuppertal, University Library.
    12. Astrid Gamba & Anna Bottasso, 2019. "Consumer inertia in energy markets: Insights from behavioral economics," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2019(3), pages 113-130.
    13. Delgado, Laura & Shealy, Tripp, 2018. "Opportunities for greater energy efficiency in government facilities by aligning decision structures with advances in behavioral science," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3952-3961.
    14. Eduard Marinov, 2017. "The 2017 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 117-159.
    15. Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
    16. Matthias Buchholz & Oliver Musshoff, 2021. "Tax or green nudge? An experimental analysis of pesticide policies in Germany [A psychological study of the inverse relationship between perceived risk and perceived benefit]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(4), pages 940-982.
    17. Frederiks, Elisha R. & Stenner, Karen & Hobman, Elizabeth V., 2015. "Household energy use: Applying behavioural economics to understand consumer decision-making and behaviour," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1385-1394.
    18. Robinson, Peter John & Botzen, W. J. Wouter & Kunreuther, Howard & Chaudhry, Shereen J., 2021. "Default options and insurance demand," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 39-56.
    19. Camara, N'Famory & Xu, Deyi & Binyet, Emmanuel, 2017. "Understanding household energy use, decision making and behaviour in Guinea-Conakry by applying behavioural economics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 1380-1391.
    20. Víctor Alberto Pena & Alina Gómez-Mejía, 2019. "Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 11(2), pages 389-409, November.

    More about this item

    Keywords

    Right of withdrawal; Consumer law; Mandatory right; Option model; Consumer behavior; Framing; Status quo bias;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ajotap:0010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alim Al Ayub Ahmed (email available below). General contact details of provider: https://abc.us.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.