Social Sciences in China (Chinese Edition)

No.5, 2019

 

On the Result-oriented Disclosure of Information

(Abstract)

 

Ying Feihu

 

Under China’s consumer law, operators must disclose information on goods or services prior to the transaction. This relatively static information disclosure is necessary if consumers are to make the right consumption choices, but in the case of free or low-cost transactions, consumers must make their decisions before receiving goods or services goods at a later date. This time difference enables operators to play on consumers’ cognitive biases and psychological weaknesses, thus imperceptibly harming consumer interests. To address this market failure, we must set up a result-oriented information disclosure system in China’s consumer law. Under this system, result-oriented information would be disclosed to consumers before the transaction and the information disclosure would cover the complete transaction process in such a way as to faithfully and comprehensively reflect the transaction’s costs and benefits, thus enabling consumers to make an informed choice. The knowledge and approach of behavioral economics is indispensable in gaining an understanding of fair trade and market failure and in exploring the appropriate and effective regulation of public rights.