Document Type

Working Paper

Publication Date

4-29-2020

SSRN Discipline

MRN Marketing Network; LSN Subject Matter eJournals; Financial Economics Network; Health Economics Network; CGN Subject Matter eJournals; Management Research Network; Economics Research Network; Legal Scholarship Network; HEN Subject Matter eJournals; Entrepreneurship Research & Policy Network; Law School Research Papers - Legal Studies; Corporate Governance Network; MKTG Subject Matter eJournals

Abstract

Legal scholars have long recognized that market norms are respected not only because of consumer protection laws but also because of internal market dynamics Consumers the argument goes fend for themselves and hold sellers accountable But how exactly do consumers discipline sellers The most influential model has been the informed minority theory according to which a critical mass of informed consumers reads and negotiates contracts in advance thereby pressuring sellers to offer better contracts to all consumers Recent empirical studies however cast doubt on the existence of such a mass leading many to view the informed minority theory as unrealistic What then may explain bottomup governance in a world where consumers do not read contractsbrbrIn this contribution to the Clifford Symposium we aim at exposing a different mechanism of market discipline one that works not through ex ante reading and negotiating but rather through ex post pressures to meet buyers' expectations We specifically emphasize the role of a small subset of consumers that we dub "nudniks" Nudniks are those consumers who call in to complain fill out satisfaction surveys post online reviews and file lawsuits Driven by an innate sense of justice and atypical motivations these nudniks act as crusading consumers against underperforming sellers Through their actions nudniks direct attention to seller failure leading to a variety of formal and informal sanctions thus presenting a more realistic form of consumer activism in today's overwhelming information environment

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