¡Gracias, Salazar!

According to the results presented above, it is clear that uninformed adherents will be offered adhesion contracts which totally remove their surplus. However, because of competition, the proponents will continue to make zero benefits. Thus, the inefficiency of adhesion contracts is clear.

However, the possiblity of demanding a minimum standard of quality would improve this result substantially, by allowing adherents to keep part of their surplus. This standard case be defined by the identification of the clauses which would not be able to be part of the contract, instead of the regulation of the whole content. This means that the situation of the adherents will be improved, by simply excluding some special types of clauses. This type of solution to improve market inefficiency has already been proposed by some academics. The proposal that best illustrates this idea is that of Alfaro on the declarative efficacy that general conditions must have. In his demands for adhesion contracts to be subject to their content being in agreement with the legal norms and principles of the Law, Alfaro states that adhesion contracts should reflect the distribution criteria of contractual 21 obligations and the equivalence of the considerations which the legal system has considered desirable. To ensure this result by controlling the quality of the content of adhesion contracts requires that their quality should not be inferior to that determined by the legal system. But this control should be always carried out before the signing of the contract, as the cost of legal action is often prohibitive for adherents. The high costs of legal action makes it impossible to correct the quality of the majority of the contracts in a particular market because a type of control which is exclusively ex post cannot ensure a significant improvement in social welfare. The solution must be found in the preceeding stage, so that all adherents are covered by the improvement in quality and not only those who are able to do so, as a result of an expensive intervention by judges.

Based on the results (del experimento con estudiantes que actuaban como oferentes de contratos de seguros de responsabilidad civil del automóvil y como tomadores del seguro), it is possible to state that the market is quite inefficient when assigning high quality contracts at competitive prices. In addition, the majority of the transactions ended up being carried out with low quality contracts. Finally, it is clear that the price charged is not related to the quality offered. All these results were consistently observed and show the main conclusion of the proposed theoretical model. However, in the experiments it was not possible to observe evidence of the convergence of prices and the qualities of equilibrium. What was vital is that in asymmetrical information markets on the quality of the contracts offered, there is no possibility of ensuring efficiency, even by modifying the number of informed adherents, as in the experiments where the number of informed people was increased, there was no real evidence of an improvement in efficiency, nor of a considerable reduction in the number of low quality contracts.

Theoretical Approximation and Experimental Evaluation of Market Functioning when Transactions are Regulated by Adhesion Contracts Author: Salazar, Diego F., Department of Economics, Universidad de los Andes, Colombia Publication Date: 06-17-2008 Series: Latin American and Caribbean Law and Economics Association (ALACDE) Annual Papers Publication Info: Berkeley Program in Law & Economics Permalink: https://escholarship.org/uc/item/5s27g2q7