A bad education

Jane Bambauer, Jonathan Loe, D. Alex Winkelman

Research output: Research - peer-reviewReview article

Abstract

Mandated-disclosure laws achieve their regulatory goals by educating the public about latent attributes of a product or service. At their best, they improve the accuracy of consumers' cost-benefit analyses compared to a world without disclosure and inspire firms to reduce unnecessary risks. When mandated disclosures, however, do not improve cost-benefit assessments - when they are useless or, worse still, when they reduce the quality of those assessments - then they constitute a bad education. American privacy law, which is principally a mandated-disclosure regime, imposes a bad education on consumers. This Article proposes a theory for differentiating valuable disclosures from wasteful and harmful ones. Valuable disclosures provide notice about material attributes without inducing an overreaction. After validating the theory in an experimental setting using disclosures about health risks, moral risks, and pseudoscience, we apply the model to four distinct forms of privacy-invasive practices. We find that the disclosures required by regulators are usually wasteful and may cause consumers to overreact. This is the first study to compare disclosures about privacy practices to disclosures about other types of attributes. It raises, for the first time, a troubling insight: if consumer law were guided by the same justifications as our privacy law, it would have to mandate disclosures about GMOs, animal testing, and an unlimited range of other attributes that produce visceral responses.

LanguageEnglish (US)
Pages109-166
Number of pages58
JournalUniversity of Illinois Law Review
Volume2017
Issue number1
StatePublished - 2017

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education
privacy law
privacy
Law
costs
health risk
animal
regime
firm
cause

ASJC Scopus subject areas

  • Law

Cite this

Bambauer, J., Loe, J., & Winkelman, D. A. (2017). A bad education. University of Illinois Law Review, 2017(1), 109-166.

A bad education. / Bambauer, Jane; Loe, Jonathan; Winkelman, D. Alex.

In: University of Illinois Law Review, Vol. 2017, No. 1, 2017, p. 109-166.

Research output: Research - peer-reviewReview article

Bambauer, J, Loe, J & Winkelman, DA 2017, 'A bad education' University of Illinois Law Review, vol 2017, no. 1, pp. 109-166.
Bambauer J, Loe J, Winkelman DA. A bad education. University of Illinois Law Review. 2017;2017(1):109-166.
Bambauer, Jane ; Loe, Jonathan ; Winkelman, D. Alex. / A bad education. In: University of Illinois Law Review. 2017 ; Vol. 2017, No. 1. pp. 109-166
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