TY - GEN AB - Contract terms that improve or reduce the likelihood of repayment of a debt should impact its price. That is basic economics. But what about a contract that is hundreds of pages long and has lengthy and complex terms that even the lawyers are unwilling to read? Believers in efficient markets might predict that variations that affect the likelihood of repayment in such obscure contract terms will be priced at the outset if there are profits to be made by exploiting these variations. An alternate view is that little attention is paid to the fine print in highly standardized contracts until the likelihood of default becomes sufficiently salient to make reading the fine print worthwhile. Using several inadvertent real-world experiments, we examine the question of how and when variations that are assumed to be standardized in obscure contract terms are priced. AU - Choi, Stephen J. AU - Gulati, Mitu AU - Panizza, Ugo AU - Scott, Robert E. AU - Weidemaier, W. Mark C. DA - 2024 DO - 10.1093/cmlj/kmae011 DO - doi ID - 318991 KW - Finance and Investment L1 - https://repository.graduateinstitute.ch/record/318991/files/kmae011.pdf L2 - https://repository.graduateinstitute.ch/record/318991/files/kmae011.pdf L4 - https://repository.graduateinstitute.ch/record/318991/files/kmae011.pdf LK - https://repository.graduateinstitute.ch/record/318991/files/kmae011.pdf N2 - Contract terms that improve or reduce the likelihood of repayment of a debt should impact its price. That is basic economics. But what about a contract that is hundreds of pages long and has lengthy and complex terms that even the lawyers are unwilling to read? Believers in efficient markets might predict that variations that affect the likelihood of repayment in such obscure contract terms will be priced at the outset if there are profits to be made by exploiting these variations. An alternate view is that little attention is paid to the fine print in highly standardized contracts until the likelihood of default becomes sufficiently salient to make reading the fine print worthwhile. Using several inadvertent real-world experiments, we examine the question of how and when variations that are assumed to be standardized in obscure contract terms are priced. PY - 2024 T1 - Obscure contract termsan inadvertent pricing experiment TI - Obscure contract termsan inadvertent pricing experiment UR - https://repository.graduateinstitute.ch/record/318991/files/kmae011.pdf Y1 - 2024 ER -