Adi Osovsky, ‘The Misconception of the Consumer as a Homo Economicus: A Behavioral-Economic Approach to Consumer Protection in the Credit-Reporting System’

Abstract:
… This Article suggests that the current regulatory system has been captivated by the misconception of the consumer as a homo economicus. Existing regulations have given consumers a significant role in facilitating the production of more accurate credit, envisioning rational, vigilant, and alert consumers who regularly monitor their credit reports, dispute errors, and opt out from marketing lists. Studies have shown, however, that consumers’ rationality in decision-making is in fact doubtful, and so too is the justification of imposing monitoring responsibilities on consumers. This Article challenges the economic-regulatory approach through the behavioral-economic approach — a relatively new model that aspires to explain consumers’ biases and cognitive limitations, which are absent in the standard economic framework. This Article explores two potential consumer-protection mechanisms, drawn from the behavioral-economic framework: applying psychological tools, such as disclosure and framing, for a better-designed system; and enhancing consumer financial literacy …

Adi Osovsky, ‘The Misconception of the Consumer as a Homo Economicus: A Behavioral-Economic Approach to Consumer Protection in the Credit-Reporting System’. SUFFOLK UNIVERSITY LAW REVIEW Vol. XLVI:881 (2013).

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