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March 31, 2008

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Joan A. Conway

Posting reviews of retail outlets that see cell phones gives warning of fraudulent business practices concerning the purchase of air time after the purchase of the cell phone, without customer's expectations being reached beforehand as to the manufacturer's promises that the cell phone indeed takes pictures in broad daylight, etc.

The intention is to entrap the consumer into a purchase of air time that will not be returnable after it is installed in the cell phone. If the customer's expectations of consumer experience is less than desired, they are caught into the air time entrapment.

If a push button made this fraudulent business practice faster without the after-the-fact- no-knowledge offered, or perhaps known salesman, like I recently hand, than I would nix this be faciliated with a one clip surrender into the "Like a Virgin" corporate scam.

Walker

I wrote a paper in law school about how "libertarian paternalism" can't work with regulation of financial innovations. At the same time my girlfriend was writing a paper called something like "Inherent failings in current subprime mortgage securities: collapse predictable". On one hand, I think that Libertarian Paternalism only creates transaction costs for financial institutions that, even if they are not rational actors, are always willful actors that choose to act, in their own eyes, in the manner that is in their best interest (financially, probably weighted to the short term in reaction to market pressures created by human psychology). At the point where the transaction costs become high enough, the "libertarian" aspect of libertarian paternalism fades. But the mortgage markets are where the world of guiding disinterested, uninterested, rushed, and/or confused consumers meets the world of self-interested and analytical financial institutions. I'd be interested to hear Cass or Richard speak to what one-click paternalism might have done to avoid the current credit crunch. Maybe there are no solutions from this governance mindset at this level of policy/economy. I am trying to envision it: maybe you have to click out of a fixed rate mortgage and in to an arm, with some disclaimers? How else could one-click paternalism be effective for the mortgage market?

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