IDEAS home Printed from
   My bibliography  Save this paper

Does Anyone Read the Fine Print? Testing a Law and Economics Approach to Standard Form Contracts



A cornerstone of the law and economics approach to standard form contracts is the Òinformed minorityÓ hypothesis: in competitive markets, a minority of term-conscious buyers is enough to discipline sellers from offering unfavorable boilerplate terms. The informed minority argument is widely invoked to limit intervention in consumer transactions, but there has been little empirical investigation of its validity. We track the Internet browsing behavior of 45,091 households with respect to 66 online software companies to study the extent to which potential buyers access the standard form contract associated with software purchases, the end user license agreement. We find that only one or two out of every thousand retail software shoppers chooses to access the license agreement, and those that do spend too little time, on average, to have read more than a small portion of the license text. The results cast doubt on the relevance of the informed minority mechanism in a specific market where it has been invoked by both theorists and courts and, to the extent that comparison shopping online is relatively cheap and easy, suggest limits to the mechanism more generally.

Suggested Citation

  • Yannis Bakos & Florencia Marotta-Wurgler & David R. Trossen, 2009. "Does Anyone Read the Fine Print? Testing a Law and Economics Approach to Standard Form Contracts," Working Papers 09-04, NET Institute, revised Aug 2009.
  • Handle: RePEc:net:wpaper:0904

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Thomas J. Maronick, 2014. "Do Consumers Read Terms of Service Agreements When Installing Software? - A Two-Study Empirical Analysis," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 4(6), pages 137-145, June.
    2. Thomas J. Maronick, 2014. "Do Consumers Read Terms of Service Agreements When Installing Software? - A Two-Study Empirical Analysis," International Journal of Business and Social Research, LAR Center Press, vol. 4(6), pages 137-145, June.
    3. Mitja Kovač & Ann-Sophie Vandenberghe, 2015. "Regulation of Automatic Renewal Clauses: A Behavioural Law and Economics Approach," Journal of Consumer Policy, Springer, vol. 38(3), pages 287-313, September.
    4. Procaccia Yuval & Harel Alon, 2012. "On the Optimal Regulation of Unread Contracts," Review of Law & Economics, De Gruyter, vol. 8(1), pages 59-89, April.
    5. Zev J. Eigen, 2012. "When and Why Individuals Obey Contracts: Experimental Evidence of Consent, Compliance, Promise, and Performance," The Journal of Legal Studies, University of Chicago Press, vol. 41(1), pages 67-93.
    6. Maen Alaraj & Makoto Nishibe, 2020. "Stimulate currency circulation in the currency community by creating a customized community," Evolutionary and Institutional Economics Review, Springer, vol. 17(2), pages 399-412, July.
    7. Florencia Marotta-Wurgler, 2012. "Does Contract Disclosure Matter?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(1), pages 94-119, March.
    8. N. Helberger & M. Loos & Lucie Guibault & Chantal Mak & Lodewijk Pessers, 2013. "Digital Content Contracts for Consumers," Journal of Consumer Policy, Springer, vol. 36(1), pages 37-57, March.

    More about this item


    online contracts; clickwrap; informed minority; ecommerce law; contracts law; standard form contracts;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:net:wpaper:0904. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.