Behavioural Economics in Consumer Protection

Abstract

THE AIMS OF THE PAPER

Revealing unfair manipulation of consumer decisions and the related consumer protection regulations are important for understanding consumer behaviour. In the last decades, research findings of behavioural economics play a key role in shaping consumer policy. In our paper, we examine how results of behavioural economics could be applied in the practice of consumer protection.

METHODOLOGY

Based on case studies from the decisions of the Hungarian Competition Authority (GVH) connected to three types of products, we present examples of decision-making heuristics and look at how authorities resolved these practices and how they affected regulations.

MOST IMPORTANT RESULTS

We identified commercial practices taking advantage of decision-making mistakes (even if unintentionally), particularly in terms of quantity, delivery method and product attributes relevant in buying decision making process. In part, this might be traced back to the over- or under-regulation associated with certain groups of products.

RECOMMANDATIONS

The non-rational consumer behaviour patterns explored by behavioural economics both implicitly and explicitly appear in consumer protection legislation and practices. Therefore, they may serve as a solid basis not only for law enforcement but for legislation as well. We also aim to highlight the importance of consumer protection regulation studies in marketing education. In addition, we argue that the analysis of our cases could be useful for marketing professionals. Profound knowledge of regulation is a key aspect for the corporate side, and consumer protection helps to make better decisions on the demand side.