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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
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    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

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