Consumer Protection

Consumer Protection

When people buy something or sign contracts, they don't always act to their own advantage. Consumer protection thus means protecting consumers not only from producers but also from themselves.

Previously, consumer protection measures relied primarily on informing consumers. If people had detailed knowledge of a product’s features, it was assumed, they would make the right decision. However, empirical research conducted by behavioural economists has shown that there are limits to human rationality and these also apply to purchasing decisions. For example, there is often a surfeit of information which prevents people from recognising the important criteria. Modern consumer protection therefore also takes into account this problem of restricted rationality. The idea behind it is to continue leaving decisions to the consumers – but to improve them.