Papers by Omar Vásquez Duque
From a consequentialist perspective, the deterrence of undesirable behavior is one of the main fu... more From a consequentialist perspective, the deterrence of undesirable behavior is one of the main functions of a legal system. For antitrust law, the deterrence of cartel behavior is its least controversial goal. Cartels harm markets economies with static and dynamic inefficiencies. And jurisdictions look — often misguidedly — to render collusive behavior unprofitable so that firms do not engage in collusive practices. This article analyzes the Chilean experience in terms of economic and social factors that can induce decision-makers to collude. This study departs from prior work that has emphasized the limits of black box theories to deter corporate crime; the limits of optimal fines in cartel cases; and how social perceptions can also explain the proliferation of criminal behavior. Against this background, I surveyed lawyers in Chile to test how corporate and individual fines, as well as social influence impact people’s disposition to collude. The results shed light on the limits of ...
Journal of Competition Law & Economics
In January 2009, the European Commission accused Microsoft of extending its monopoly from the ope... more In January 2009, the European Commission accused Microsoft of extending its monopoly from the operating system market to the browsers market by preinstalling Internet Explorer (IE) and setting it as the users’ default. Microsoft settled the case agreeing to display a choice screen to its users located in the European Economic Area, Croatia, and Switzerland, whose default web browser was Internet Explorer. The remedy would allow Microsoft’s users to freely choose whatever internet browser they preferred. After March 2010, IE’s market share did go down in the EEA, Croatia, and Switzerland. It seems straightforward to attribute IE’s decline to the choice screen itself. However, when considering other developed jurisdictions as a comparison group, the impact of the choice screen on IE’s market share is negligible (roughly, between 1.4 and 2 percent). This finding invites us to assess the potential causes of default effects and the effectiveness of strategies that analysts, policymakers,...
Chile recently introduced an innovative food warning label system that intends to reduce current ... more Chile recently introduced an innovative food warning label system that intends to reduce current overweight and obesity levels among the Chilean population. This initiative has been generally commended worldwide. Chile’s new food labeling system mandates food producers to include a warning label that resembles a stop sign when the product exceeds a certain level of calories, fat, sodium, and sugar per 100 mg. The idea behind this regulation is that by making health risks more salient to eaters with simplified disclosures, people will change their eating behavior. As a consequence of this new law, many product markets show a clear change in production recipes so that products can be offered with no (or fewer) warning labels. This is the case of Coca-Cola, and many desserts, including yogurts, flans, and even ice creams. Surveys report that many consumers—especially those from high-income backgrounds and the elderly—consider the warning labels when they purchase food and drinks. Yet t...
Concurrences Review, Feb 1, 2021
Excessive pricing is one of the most controversial topics in competition law. Notwithstanding exc... more Excessive pricing is one of the most controversial topics in competition law. Notwithstanding excessive pricing being one of the most blatant forms of abuse, a non-intervention policy tends to be the prevalent choice worldwide. Such a “hands-off” approach is based on the grounds that excessive prices self-correct, as well as practical difficulties in measuring a competitive benchmark and identifying excessiveness, and the fear of distorting ex ante incentives to innovate and invest. This article aims at providing a more balanced approach, which might be particularly useful for small economies, since market failures tend to linger for a longer time in small markets. Accordingly, it reviews the literature concerning the merit of antitrust intervention and the tests proposed to determine when intervention should take place. Then it illustrates the Chilean experience, which shows challenges concerning the scope of competition law; its goals; and principally the identity of a jurisdictio...
Social Science Research Network, 2022
Preinstalled applications are pervasive in both computers and mobile devices. Recent antitrust ca... more Preinstalled applications are pervasive in both computers and mobile devices. Recent antitrust cases in the U.S. and Europe have scrutinized the defaults’ potential to foreclose competing applications. So far, enforcers and analysts have tended to assume that default (or stickiness) effects exist, and that forced choice strategies are the best way to overcome the users’ inertia and consequently level the field among competitors.
This article uses experimental methods to test the stickiness hypothesis and the effectiveness of potential remedies. With a series of experiments ran on Amazon Mechanical Turk, this work evaluates whether current market shares reflect what consumers would choose if they were forced to choose; and whether default effects exist and why. Due to the difficulty of resembling the choice environment in which people use a search engine, this study focuses on the desktop segment of the market.
When facing a task for which a search engine must be used, most of the experiment participants chose Google, and the preference for Google resembled current market shares. Nonetheless, the participants who were assigned to the Yahoo or Bing by default conditions tended to give these alternatives a try before switching to Google. My data suggest that consumers’ misperceptions about Google alternatives’ quality are an important obstacle to their market penetration. This effect is clear for Bing yet not for Yahoo. Despite both having the same search algorithm only Bing benefited from a substantial increase in its perceived quality after the study participants experimented with it. This may imply that only defaults that users regard as a high-quality option may stick in the long term. The preceding findings suggest that the potential anticompetitive effect of Google’s strategy is to prevent users from exploring competing search engines that could satisfy the users’ quality threshold to stick.
SSRN Electronic Journal, 2021
The recent advances in computing power have increased the power and availability of data collecti... more The recent advances in computing power have increased the power and availability of data collection. Consumers face both advantages and costs due to sharing their data. While the GDPR is widely regarded as the strictest privacy law ever passed, its focus on informational selfdetermination overlooks how people's clicks can be manipulated by dark patterns. This study is an empirical examination of how the design of cookies windows affects the cookies acceptance rates. This work contributes to the academic and policy literature by showing how the GDPR model and its progeny are currently being circumvented. With a sample size of little less than 200 participants, this experimental study found a substantial difference in the cookies acceptance rate of a neutral and a highlighted versions of cookies windows that contained the very same content. From these findings it follows that, to properly protect people's privacy, it is necessary to switch from a formalistic model centered on consent to another that addresses the widespread manipulation of the choice environment.
SSRN Electronic Journal, 2021
In March 2010, Microsoft started displaying a choice screen to its users whose default web browse... more In March 2010, Microsoft started displaying a choice screen to its users whose default web browser was Internet Explorer (IE). This screen included the 12 most widely-used web browsers that run on Windows and was imposed as a consequence of an antitrust investigation in which the European competition authorities accused Microsoft of extending its monopoly from the operative system market to the web browsers market by including IE as Windows’ default web browser. After March 2010, when the choice screen started operating, IE’s market share did go down. It seems straightforward to attribute IE’s decline in Europe to the choice screen itself. However, considering publicly available data from StatCounter, a common trend among developed countries is quite noticeable. IE’s market share was going down before Microsoft started displaying the choice screen in Europe. In fact, IE’s decline, which continues in the following years, is also evident in the U.S., Australia, Canada, among many other countries that did not display choice screens. A differences-in-differences analysis shows that when considering these other jurisdictions as a comparison group to assess the choice screen’s effect on IE’s market share drop, the impact of the intervention is negligible. When the U.S. serves as the control group, the choice-screen leads to a change in IE’s between -1.76% and 0.08%, depending on the time frame considered as pre-post. And only the difference of -1.76% with a 6-month time frame is statistically significant. However, when considering the average of the U.S., Canada, and Australia as the control group, the choice screen’s impact is between -0.16% and -0.69% and not statistically significant. This preliminary finding invites us to assess how sticky default applications can be. Consumers have become more sophisticated 25 years after the first U.S. Microsoft case. Thus the theory of harm and the remedies that may address consumers’ inertia should be re-examined. In particular, what types of consumers may stick to default applications, whether the choice-screen design has been ineffective, as well as the reach of choice screens.
SSRN Electronic Journal, 2019
Pharmaceutical spending is in many countries the second largest family expenditure, after food. N... more Pharmaceutical spending is in many countries the second largest family expenditure, after food. No one questions that pharmaceutical companies invest large sums in research and the development of new and better pharmaceutical drugs. Originators are protected by patents and sold in monopolistic conditions. However, once generics enter the market, they provide people with an equally safe and effective alternative to protect their health. Nonetheless, some doctors keep on prescribing originators after the entry of generics. Some jurisdictions control this by mandating doctors to prescribe the generic drug; other countries mandate pharmacists to deliver the generic medicine. However, some countries merely rely on people’s freedom to choose, by allowing doctors to prescribe the originator product and letting patients substitute the prescribed medicine for a cheaper one at the pharmacy.<br><br>This work tests whether people tend to stick to the medicine doctors prescribe, despite the availability of a cheaper generic. To this end, I ran a survey-experiment on Amazon Mechanical Turk, presenting a hypothetical scenario in which the respondents had to choose between an innovator medicine and its generic form to treat two different medical conditions. I used a between-subjects approach to compare the respondents’ self-reported purchase intention, manipulating what medicine was prescribed by the doctor, whether the doctor conveyed substituting the originator for the generic was fine, and whether the respondent had to treat a mild disease or a severe one.<br><br>The results show that, at least for mild diseases, pro-originator defaults lead to stickiness (compared to pro-generic defaults). This is a prescriptive claim that casts doubt on the effectiveness of liberal policies that intend to encourage the use of generics by just allowing people to substitute the prescribed originator for a generic. On a normative level, it is hard to appraise the endogeneity of people’s preferences to the default. But by considering people’s purchase intention for a more expensive product over a cheaper substitute as a mistake, we can derive the normative basis to favor pro-generic defaults or even mandatory rules favoring generics. <br>
SSRN Electronic Journal, 2017
Economic Analysis of Law Review The Costs of Loyalty. On Loyalty Rewards and Consumer Welfare Os ... more Economic Analysis of Law Review The Costs of Loyalty. On Loyalty Rewards and Consumer Welfare Os custos da Lealdade. Sobre recompensas de lealdade e Bem-estar do consumidor
SSRN Electronic Journal, 2017
Spouses in Chile have three different choices of matrimonial property regimes: marital partnershi... more Spouses in Chile have three different choices of matrimonial property regimes: marital partnership, separation of goods, and community of gains. The default regime is the marital partnership and most people stick to it at the moment of marriage. Spouses can, however, opt out before and after the marriage to any of the two other alternatives. Taking into consideration data from 2006 to 2014, 55% of spouses in average stuck to the default matrimonial property regime. The prevalence of defaulting at the moment of the marriage is despite the increase in divorce rates, the discriminatory nature of the regime towards women, and a significant rate of ex-post opt-outs. The foregoing sheds doubt on the reasons why people—and particularly women— might prefer the marital partnership. This study attempts to determine: (i) whether the default regime imposes an emotional tax on spouses or prevails because of inertia; (ii) the impact of social norms in people&#39;s decision making; (iii) misperceptions about divorce rates; (iv) optimism bias; and (v) knowledge of current restrictions women face under the marital partnership. Finally, this study assessed (vi) whether people would find it acceptable to switch the default rule to separation of property. With this purpose I run an experiment in social media, surveying married people in Chile. The findings showed that the default did not impose an emotional burden for most people who decided to stick to the default. While inertia and herd behavior might have had an influence on 33% of people who defaulted, ignorance about the actual divorce rates, optimism and unawareness about the restrictions the marital partnership imposes on women explain better the high rate of spouses that stick to the marital partnership. In light of current divorce rates this is a sub-optimal outcome, triggered by incomplete information and optimism. Informational campaigns should overcome this failure. In addition, switching the default rule would be a positive nudge to help people make better decisions.
SSRN Electronic Journal, 2018
Disclosure as a regulatory technique faces strong criticisms. However, regulators keep relying on... more Disclosure as a regulatory technique faces strong criticisms. However, regulators keep relying on this technique to remedy market failures. Obesity is not an exception. Ultra-processed food dominates our diet, despite being a main cause of overweight and obesity. Overweight and obesity, in turn, are major risk factors for many chronic diseases, such as diabetes and cancer. Nutrition labels are a type of disclosure. The empirical evidence of their effectiveness is mixed. This might be because nutrition labels have to deal with consumers' lack of literacy and/or information overload. Regulatory simplification can be an alternative to enhance label's efficacy. However, current criticisms of disclosure also reach its simplified forms, predicting that simpler labels will not have an effect on consumer behavior. Chile's new food labeling law incorporates a warningsigns model to alert consumers of foods and drinks containing sugar, fat, sodium, and calories levels above a certain threshold. This paper provides an exploratory impact assessment of this law, casting doubt on the skeptics' view of the inefficacy of simplified disclosures. I mostly base this analysis on information available online (i.e., impact assessment surveys; newspaper articles; stakeholder presentations). However, I also conducted field interviews with key actors to complement, and corroborate, the information available on the internet. The Chilean experience is still recent; however, it shows that simpler disclosures can have a significant effect on consumer behavior. This is a positive (or descriptive) claim. Although generalizations are hard to make, consumers tend to prefer products with no (or fewer) labels. Accordingly, only one year after the new labeling law was enacted, more than 1,500 products have modified their composition. This is despite warning labels appearing to impact only well-educated consumers. This may be causing an externality on less-educated consumers in some markets, probably a "positive" one, in many cases. On a normative level, the impact of the new labeling regulation on the nutritional value of food is still unclear. The strategies to reach the safe harbors may not only decrease the intake of ingredients subject to control but also the nutritional value of food. Further research should provide a more specific snapshot of how particular markets reacted to the new labeling law. In addition, consumers might be drawing incorrect inferences from the warning labels. The main objective of this article is to show that consumers are not indifferent or unreactive to food warning labels. Precisely because of this, law-makers should be careful in designing regulations that consider not only how consumers will respond to the warning-labels, but also how industry participants will react to supply products with no (or fewer) labels.
SSRN Electronic Journal, 2015
Excessive pricing is one of the most controversial topics in competition law. Notwithstanding exc... more Excessive pricing is one of the most controversial topics in competition law. Notwithstanding excessive pricing being one of the most blatant forms of abuse, a non-intervention policy tends to be the prevalent choice worldwide. Such a “hands-off�? approach is based on the grounds that excessive prices self-correct, as well as practical difficulties in measuring a competitive benchmark and identifying excessiveness, and the fear of distorting ex ante incentives to innovate and invest. This article aims at providing a more balanced approach, which might be particularly useful for small economies, since market failures tend to linger for a longer time in small markets. Accordingly, it reviews the literature concerning the merit of antitrust intervention and the tests proposed to determine when intervention should take place. Then it illustrates the Chilean experience, which shows challenges concerning the scope of competition law; its goals; and principally the identity of a jurisdiction influenced by both the American and the European systems. This work concludes, on a policy level, that antitrust law might have a role to play in excessive pricing cases; and points out that even if hard enforcement is not considered appropriate, soft-enforcement strategies might also be advisable to address excessive prices. On a practical level, this article concludes that jurisdictions where excessive pricing provisions already exist should prefer tests aimed at defining a workable application of such provisions. This paper provides guidelines to determine their enforcement.
Hastings Int'l & Comp. L. Rev. 144, 2021
Chile recently introduced an innovative food warning label system that intends to reduce current ... more Chile recently introduced an innovative food warning label system that intends to reduce current overweight and obesity levels among the Chilean population. This initiative has been generally commended worldwide. Chile’s new food labeling system mandates food producers to include a warning label that resembles a stop sign when the product exceeds a certain level of calories, fat, sodium, and sugar per 100 mg. The idea behind this regulation is that by making health risks more salient to eaters with simplified disclosures, people will change their eating behavior.
As a consequence of this new law, many product markets show a clear change in production recipes so that products can be offered with no (or fewer) warning labels. This is the case of Coca-Cola, and many desserts, including yogurts, flans, and even ice creams. Surveys report that many consumers—especially those from high-income backgrounds and the elderly—consider the warning labels when they purchase food and drinks. Yet the only econometric study conducted with observational data that analyzed the impact of the food warning labels reported ambiguous results (i.e., some products despite the labels increased their demand, while others showed lower sales).
People who commend the Chilean food labeling model tend to assume that disclosure is cheap and easy. This work adopts a different view. The assessment of shifts in consumer demand has neglected the substitution of those components subject to the warning labels and the impact of this re-placement on the nutritional value of food, as well as the impact of people’s misperceptions of the labels on their diet and health. On a positive level, the preceding effect casts doubt on what skeptical authors predict about disclosure policies, who claim that people are inattentive and irresponsive to warning labels. However, on a normative level, the actual effects of this law are unclear or ambiguous. And given the prohibition to sell products with labels in preschools and schools, children are particularly vulnerable to the over-looked consequences of this regulation.
El lógico alcance de la prohibición per se: una crítica al concepto de "cartel duro" y las leccio... more El lógico alcance de la prohibición per se: una crítica al concepto de "cartel duro" y las lecciones de Socony *
Economic Analysis of Law Review , 2018
Spouses in Chile have three different choices of matrimonial property regimes to regulate their p... more Spouses in Chile have three different choices of matrimonial property regimes to regulate their pecuniary relationships among themselves and with third parties: marital partnership, separation of goods, and community of gains. The default regime is the marital partnership, and most people go along with it at the moment of marriage. Spouses can, however, opt out before and after the marriage to any of the two other alternatives. Taking into consideration data from 2006 to 2014, on average, 55% of spouses went along with the default regime.
The prevalence of marital partnership occurs despite the increase in divorce rates, the discriminatory nature of the regime towards women, and a significant rate of ex-post opt-outs. The preceding sheds doubt on the reasons why people—and particularly women—might prefer the marital partnership. This study intends to determine: (i) whether the default regime imposes an emotional tax on spouses or prevails because of inertia; (ii) the impact of social norms in people’s decision making; (iii) misperceptions about divorce rates; (iv) optimism bias; and (v) knowledge of current restrictions women face under the marital partnership. Finally, this study assessed (vi) whether people would find it acceptable to switch the default rule to separation of property. With this purpose, I surveyed married people in Chile with the help of social media.
The findings showed that the default did not impose an emotional burden for most people who decided to stick to it. While inertia and herd behavior might have influenced 33% of people who went along with the default, ignorance about the actual divorce rates, optimism, and unawareness about the restrictions the marital partnership imposes on women provided a better explanation on the high rate of spouses that stuck to the marital partnership. In light of current divorce rates, this is a sub-optimal outcome. Informational campaigns should overcome this failure. Also, switching the default rule would be a positive nudge to help people make better decisions.
Economic Analysis of Law Review, 2017
Loyalty rewards are pervasive. Airlines offer frequent flyer programs; credit cards offer miles, ... more Loyalty rewards are pervasive. Airlines offer frequent flyer programs; credit cards offer miles, points, and cash-back; and groceries stores and pharmacies offer points to redeem " free " products. Despite their framing, however, " rewards " can harm consumers. Eminent academics have recently noted that while rewards lock consumers in and increase the prices of goods, courts and regulators have paid little attention to them. Noting how a " No Contract " trend emerged in long-term commitments after consumers learned that teaser introductory rates with a lock-in clause triggered subsequent exploitative rates, they concluded that consumers can also learn the costs of loyalty. In this paper, I develop an alternative view, arguing that there are economic and psychological obstacles for the rise of " No Loyalty ". Concerning the former, facing greater competition sellers need to retain consumers to stay in the market and make a profit. Loyalty rewards can lock consumers in, but they also allow sellers to obtain information about their customers. This information is critical for sellers, because it allows them to segment the market, and target tailored promotions and advertising to the most valuable costumers. The lack of a good database places a firm in a serious competitive disadvantage. Regarding the psychological obstacles, consumers tend to overestimate their value. Rewards can develop affective reactions and cravings on buyers. Consumers also prefer market with rewards because the bundle product-reward appears to be more valuable than it really is for a significant part of the market. The main implication of this work is that both, consumers and sellers, prefer markets with rewards. Accordingly, further research should shed light on the merits of legal intervention in particular markets. This work surveys the evolution rewards have shown in the financial and airline sectors, arguing that loyalty programs trigger particular problems in specific markets. This article also suggests that the costs of rewards are more severe than lock-in and higher prices. In addition to market-specific problems (such as regressive cross-subsidization and over-spending), rewards can create an illusion of advantage (which derives from the " medium effect "), triggering a behavioral market failure.
Revista de Derecho Economico, 2017
Los profesores Oren Bar-Gill y Omri Ben-Shahar han escrito un notable artículo evaluando las técn... more Los profesores Oren Bar-Gill y Omri Ben-Shahar han escrito un notable artículo evaluando las técnicas de protección de los consumidores utilizadas con mayor frecuencia por los sistemas jurídicos -i.e.,disposiciones imperativas, deberes de divulgación, libertad de entrada y salida de los contratos y disposiciones supletorias. Los autores concluyen que el modo como se utilizan dichas técnicas en la actualidad no genera los beneficios esperados e incluso podría generar efectos imprevistos, que podrían atentar contra los fines perseguidos por el Derecho. Los autores sugieren que, con el objeto de mejorar la eficacia de la protección de los consumidores, debemos cambiar el enfoque de las trécnicas regulatorias, considerando las habilidades cognitivas de los consumidores y, asimismo, el comportamiento esperado por parte de los oferentes, quienes pueden traspasar el precio de las reformas a aquéllos.
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Papers by Omar Vásquez Duque
This article uses experimental methods to test the stickiness hypothesis and the effectiveness of potential remedies. With a series of experiments ran on Amazon Mechanical Turk, this work evaluates whether current market shares reflect what consumers would choose if they were forced to choose; and whether default effects exist and why. Due to the difficulty of resembling the choice environment in which people use a search engine, this study focuses on the desktop segment of the market.
When facing a task for which a search engine must be used, most of the experiment participants chose Google, and the preference for Google resembled current market shares. Nonetheless, the participants who were assigned to the Yahoo or Bing by default conditions tended to give these alternatives a try before switching to Google. My data suggest that consumers’ misperceptions about Google alternatives’ quality are an important obstacle to their market penetration. This effect is clear for Bing yet not for Yahoo. Despite both having the same search algorithm only Bing benefited from a substantial increase in its perceived quality after the study participants experimented with it. This may imply that only defaults that users regard as a high-quality option may stick in the long term. The preceding findings suggest that the potential anticompetitive effect of Google’s strategy is to prevent users from exploring competing search engines that could satisfy the users’ quality threshold to stick.
As a consequence of this new law, many product markets show a clear change in production recipes so that products can be offered with no (or fewer) warning labels. This is the case of Coca-Cola, and many desserts, including yogurts, flans, and even ice creams. Surveys report that many consumers—especially those from high-income backgrounds and the elderly—consider the warning labels when they purchase food and drinks. Yet the only econometric study conducted with observational data that analyzed the impact of the food warning labels reported ambiguous results (i.e., some products despite the labels increased their demand, while others showed lower sales).
People who commend the Chilean food labeling model tend to assume that disclosure is cheap and easy. This work adopts a different view. The assessment of shifts in consumer demand has neglected the substitution of those components subject to the warning labels and the impact of this re-placement on the nutritional value of food, as well as the impact of people’s misperceptions of the labels on their diet and health. On a positive level, the preceding effect casts doubt on what skeptical authors predict about disclosure policies, who claim that people are inattentive and irresponsive to warning labels. However, on a normative level, the actual effects of this law are unclear or ambiguous. And given the prohibition to sell products with labels in preschools and schools, children are particularly vulnerable to the over-looked consequences of this regulation.
The prevalence of marital partnership occurs despite the increase in divorce rates, the discriminatory nature of the regime towards women, and a significant rate of ex-post opt-outs. The preceding sheds doubt on the reasons why people—and particularly women—might prefer the marital partnership. This study intends to determine: (i) whether the default regime imposes an emotional tax on spouses or prevails because of inertia; (ii) the impact of social norms in people’s decision making; (iii) misperceptions about divorce rates; (iv) optimism bias; and (v) knowledge of current restrictions women face under the marital partnership. Finally, this study assessed (vi) whether people would find it acceptable to switch the default rule to separation of property. With this purpose, I surveyed married people in Chile with the help of social media.
The findings showed that the default did not impose an emotional burden for most people who decided to stick to it. While inertia and herd behavior might have influenced 33% of people who went along with the default, ignorance about the actual divorce rates, optimism, and unawareness about the restrictions the marital partnership imposes on women provided a better explanation on the high rate of spouses that stuck to the marital partnership. In light of current divorce rates, this is a sub-optimal outcome. Informational campaigns should overcome this failure. Also, switching the default rule would be a positive nudge to help people make better decisions.
This article uses experimental methods to test the stickiness hypothesis and the effectiveness of potential remedies. With a series of experiments ran on Amazon Mechanical Turk, this work evaluates whether current market shares reflect what consumers would choose if they were forced to choose; and whether default effects exist and why. Due to the difficulty of resembling the choice environment in which people use a search engine, this study focuses on the desktop segment of the market.
When facing a task for which a search engine must be used, most of the experiment participants chose Google, and the preference for Google resembled current market shares. Nonetheless, the participants who were assigned to the Yahoo or Bing by default conditions tended to give these alternatives a try before switching to Google. My data suggest that consumers’ misperceptions about Google alternatives’ quality are an important obstacle to their market penetration. This effect is clear for Bing yet not for Yahoo. Despite both having the same search algorithm only Bing benefited from a substantial increase in its perceived quality after the study participants experimented with it. This may imply that only defaults that users regard as a high-quality option may stick in the long term. The preceding findings suggest that the potential anticompetitive effect of Google’s strategy is to prevent users from exploring competing search engines that could satisfy the users’ quality threshold to stick.
As a consequence of this new law, many product markets show a clear change in production recipes so that products can be offered with no (or fewer) warning labels. This is the case of Coca-Cola, and many desserts, including yogurts, flans, and even ice creams. Surveys report that many consumers—especially those from high-income backgrounds and the elderly—consider the warning labels when they purchase food and drinks. Yet the only econometric study conducted with observational data that analyzed the impact of the food warning labels reported ambiguous results (i.e., some products despite the labels increased their demand, while others showed lower sales).
People who commend the Chilean food labeling model tend to assume that disclosure is cheap and easy. This work adopts a different view. The assessment of shifts in consumer demand has neglected the substitution of those components subject to the warning labels and the impact of this re-placement on the nutritional value of food, as well as the impact of people’s misperceptions of the labels on their diet and health. On a positive level, the preceding effect casts doubt on what skeptical authors predict about disclosure policies, who claim that people are inattentive and irresponsive to warning labels. However, on a normative level, the actual effects of this law are unclear or ambiguous. And given the prohibition to sell products with labels in preschools and schools, children are particularly vulnerable to the over-looked consequences of this regulation.
The prevalence of marital partnership occurs despite the increase in divorce rates, the discriminatory nature of the regime towards women, and a significant rate of ex-post opt-outs. The preceding sheds doubt on the reasons why people—and particularly women—might prefer the marital partnership. This study intends to determine: (i) whether the default regime imposes an emotional tax on spouses or prevails because of inertia; (ii) the impact of social norms in people’s decision making; (iii) misperceptions about divorce rates; (iv) optimism bias; and (v) knowledge of current restrictions women face under the marital partnership. Finally, this study assessed (vi) whether people would find it acceptable to switch the default rule to separation of property. With this purpose, I surveyed married people in Chile with the help of social media.
The findings showed that the default did not impose an emotional burden for most people who decided to stick to it. While inertia and herd behavior might have influenced 33% of people who went along with the default, ignorance about the actual divorce rates, optimism, and unawareness about the restrictions the marital partnership imposes on women provided a better explanation on the high rate of spouses that stuck to the marital partnership. In light of current divorce rates, this is a sub-optimal outcome. Informational campaigns should overcome this failure. Also, switching the default rule would be a positive nudge to help people make better decisions.
After March 2010, IE’s market share did go down. It seems straightforward to attribute IE’s decline in Europe to the choice screen itself. However, when considering other developed jurisdictions as a comparison group, the impact of the choice screen on IE’s market share is negligible. This finding invites us to assess the potential causes of default effects and the effectiveness of strategies that analysts and enforces have assumed to be effective. This work argues that the theory of harm and the remedies that may address consumers’ inertia should be re-examined. Mainly what types of consumers may stick to default applications, whether choice screens may change the users’ preferences after they have familiarized themselves with an experience good, whether choice screens have so far facilitated the development of competing applications, as well as the reach of choice screens.
This work tests whether people tend to stick to the medicine doctors prescribe, despite the availability of a cheaper generic. To this end, I ran a survey-experiment on Amazon Mechanical Turk, presenting a hypothetical scenario in which the respondents had to choose between an innovator medicine and its generic form to treat two different medical conditions. I used a between-subjects approach to compare the respondents’ self-reported purchase intention, manipulating what medicine was prescribed by the doctor, whether the doctor conveyed substituting the originator for the generic was fine, and whether the respondent had to treat a mild disease or a severe one.
The results show that, at least for mild diseases, pro-originator defaults lead to stickiness (compared to pro-generic defaults). This is a prescriptive claim that casts doubt on the effectiveness of liberal policies that intend to encourage the use of generics by just allowing people to substitute the prescribed originator for a generic. On a normative level, it is hard to appraise the endogeneity of people’s preferences to the default. But by considering people’s purchase intention for a more expensive product over a cheaper substitute as a mistake, we can derive the normative basis to favor pro-generic defaults or even mandatory rules favoring generics.
While there is substantial economic evidence criticizing deterrence policies based solely on fines, those criticisms assume that people’s preferences are stable and exogenous to the legal rules. I depart my analysis from a wider theory of human behavior than the one traditional deterrence policies build upon. This wider theory considers the expressive power of the law, and how the impact of legal rules does not only depend on economic incentives, but also on social influence and morality concerns. In this sense, I designed this study to test and measure how the nature of legal sanctions affects people’s perceptions on the legitimacy of the law, social influence, the morality of collusion, authority expectations; and how those clusters affect people’s decision to offend. I also assessed the respondents’ knowledge of the law. With this aim, I surveyed managers in Chile, following vignette-based perceptual deterrence studies carried out by criminologists.
I base my results on a sample that is not representative of the Chilean population. However, random assignment allows me to draw causal conclusions when comparing my two treatment groups (i.e., subjects exposed to the threat of individual fines and those exposed to the risk of imprisonment). Regarding deterrent effects, the self-reported likelihood of colluding to earn a bonus was lower for respondents being exposed to the threat of imprisonment. Concerning the expressive effect of the law, prison sentences led respondents to find the prohibition against price-fixing more legitimate, perceive a higher risk of dismissal if detected only by the owner of the firm, as well as thinking it was less likely their peers would offend in similar circumstances. Both groups of respondents found price-fixing profoundly immoral, regardless of the applicable sanction. Remarkably, despite the media exposure of which cartel re-criminalization benefited, most respondents did not know that, according to current Chilean law, collusion was punishable with prison sentences.
The main implication of this work is simple: When once conceives of compliance not only as a function of economic rewards and punishment, but also of morality, peer pressure, and the legitimacy of the law, it is patent that the benefits of cartel criminalization are more meaningful than typically stated. In fact, the expressive power of criminal law may enhance people’s obedience by shaping their preferences. The finding concerning the respondents’ ignorance of current antitrust sanctions calls into question the effectiveness of the Chilean Antitrust Agency’s advocacy efforts. Given the deterrent and expressive power of criminal sanctions, advocacy and communicational efforts are key for maximizing compliance.