Consumers’ Views about Mandatory Arbitration

Mandatory arbitration clauses are now included in almost every contract that a consumer signs with a large corporation, such as banks, insurance companies, and cable and internet providers. Because these clauses are typically hidden in the fine print, consumers may have a limited understanding of these clauses, and under current law, consumers also have little recourse to fight mandatory arbitration clauses. As a result of these factors, little is known about consumers’ demand for services and products without such clauses. This project will be among the first to examine consumers’ understanding of mandatory arbitration, provide estimates of consumers’ willingness to pay for contracts without mandatory arbitration, and correlate how the provision of information changes consumers’ willingness to pay for contracts without mandatory arbitration.