Behavioural Economics: Improving Consumer Policy? Rossella Incardona Bruxelles, 28 November 2008 Via Durini n Milano Tel Fax http:

Fare qui per inserire un titolo PROS A backdrop for judges, authorities, traders and lawyers Behavioural bias: a tool box for policymakers (e.g. framing effect, information overload, loss aversion, imperfect self-control, importance of other peoples behaviour, motivation to do the right thing) An invitation for consumer organizations to motivate consumers and raise their awareness A challenge and a stimulus for economists (of whatever creed) CONS Impairment of the principle of certainty of law Diminished confidence for traders Diminished consumer self-awareness and freedom of choice Behavioural Economics: Improving Consumer Policy? Fare qui per inserire un titolo 1 1. BE and Consumer Policy: Pros and Cons

2. The Proposal EC Consumer Rights Directive Fare qui per inserire un titolo The Proposal EC Consumer Rights Directive: some examples of existing policy interventions (which seem) already based on BE insights, e.g. cooling-off periods, disclosure obligations Proposals for the Proposal: symbols for withdrawal periods and EC consumer sale guarantee Article of the Proposal (additional charges actively accepted and not subject to default options): some remarks The Proposal EC Consumer Rights Directive: why not a Regulation? 2. The Proposal EC Consumer Rights Directive Fare qui per inserire un titolo 2 Behavioural Economics: Improving Consumer Policy?

3. The Average Consumer and the UCPD Fare qui per inserire un titolo The average consumer (i.e. …reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors…): too high a standard for the real consumer? The vulnerable consumer (i.e. the average member of a clearly identifiable group of consumers who are particularly vulnerable … because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee ): some criticisms UCPD: overall benefits, i.e. broad scope, proper balance of general clauses and fixed rules UCPD: the Italian experience (Service providers cases) 3. The Average Consumer and the UCPD Fare qui per inserire un titolo 3 Behavioural Economics: Improving Consumer Policy?

4. Conclusions Fare qui per inserire un titolo BE insights may help to shape a more effective consumer policy BUT they cannot offer turnkey solutions YES to non intrusive BE tools in EC consumer policy, e.g. assessing and proposing consumer policy against a backdrop of BE insights NO to the impairment of legal certainty, e.g. the notion of the vulnerable consumer, grey lists NO to limitations of consumers and traders freedom of choice, e.g. use of excessive default options, imposition of mandatory contractual forms The way forward: more time and resources needed to increase consumer awareness, make information more effective, detect bad traders, keep on studying BE! 4. Conclusions Fare qui per inserire un titolo 4 Behavioural Economics: Improving Consumer Policy?