Found 2 article(s) for author 'Consumer Protection'

Efficient Warnings, Not “Wolf or Puppy” Warnings

Efficient Warnings, Not “Wolf or Puppy” Warnings. Richard Zeckhauser, September 2016, Paper, “Governments often require that products carry warnings to inform people about risks. The warnings approach, as opposed to the command and control approach to risk regulation, functions as a decentralized regulatory mechanism that empowers individuals to make decisions that take into account their own circumstances and preferences. Thus, individuals will be aware of the risks and the value of taking precautions, and they may avoid a product that others consume if they find the risk unacceptable. Ideally, warnings would allow individuals to assess both their personal level of risk and the benefits they will receive from another unit of consumption. Then those receiving positive expected benefits will consume more; those receiving negative net benefits will curtail their consumption.Link

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Restoring Rational Choice: The Challenge of Consumer Financial Regulation

Restoring Rational Choice: The Challenge of Consumer Financial Regulation. John Y. Campbell, February 2016, Paper. “This lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively. The lecture argues that financial ignorance is pervasive and unsurprising given the complexity of modern financial products, and that it contributes meaningfully to the evolution of wealth inequality. The lecture uses a stylized model to discuss the welfare economics of paternalistic intervention in financial markets, and discusses several specific examples including asset allocation in retirement savings, fees for unsecured short-term borrowing, and reverse mortgages.Link

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