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Abstract

Does the threat of legal reform encourage companies to adopt high-quality contract terms that consumers ignore so that companies can use them in lobbying efforts to avoid reform? That may be an overlooked answer to a puzzle about consumer contracts. Consumers ignore most contract terms at the time of acceptance, so scholars usually expect companies to pick ignored terms of the lowest possible quality that courts will let them get away with. But some companies pick terms that are surprisingly high-quality. Courts do not require these terms that consumers ignore, so firms that pick them incur costs for seemingly little gain.

This Article identifies a novel function of these terms: their audience is not courts or consumers but policymakers deciding whether to reform status quo legal rules from which companies profit. Drawing on behavioral law and economics, and illustrating with a case study of lobbying surrounding the Consumer Financial Protection Bureau’s bank account overdraft rule, this Article shows how companies use the high-quality terms they adopt in anticipation of regulation to “frame” the status quo rule. High-quality terms help show how the status quo rule might benefit consumers, letting companies appeal to policymakers’ cognitive biases so they are more likely to support the status quo rule. This Article addresses several practical and theoretical implications of anticipatory self-regulation to frame reform. On one hand, even the threat of legal reform might influence the kinds of contract terms businesses adopt. On the other, a small minority of contract terms can take on outsized role in policy debates about legal reform, potentially distorting policymaking. As a theoretical matter, moreover, the Article complements information revelation models of sequential policymaking by showing how actors at one stage can frame information so policymakers at a later stage resort to decision-simplifying heuristics that favor the status quo.

I. Introduction

II. Unexpectedly High-Quality Nonsalient Terms ... A. The Expected Race to the Bottom ... B. Puzzling Examples of High-Quality Nonsalient Terms ... 1. Overdraft Protection ... 2. Website Privacy Policies ... 3. Pro-Consumer Clauses in Relational Contracts of Adhesion ... 4. Do We See Anticipatory Self-Regulation Elsewhere?

III. Anticipatory Self-Regulation and Framing Effects ... A. Framing the Status Quo in Policy Discourse with Contract Terms ... 1. Framing Effects ... 2. Contract Terms’ Salience to Policymakers ... B. Case Study: Using Anticipatory Self-Regulation to Frame Policy Choice ... 1. Status Quo Bias ... 2. Loss Aversion ... 3. Availability ... C. A General Account of Anticipatory Self-Regulation to Frame Policy ... D. Objections and Alternative Explanations ... 1. Assessing Objections … 2. Alternative Explanations to Anticipatory Self-Regulation

IV. Implications ... A. Theoretical, Empirical, and Normative Implications ... B. Practical Implications for Policymakers and Reformers

V. Conclusion

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