This paper builds upon the findings of cognitive psychology to revisit the prescriptive solutions proposed in the legal literature with respect to efficient penalty clauses. While refraining from generalizations regarding human behaviour, generalizations that might lead to positions quite...

This paper aims to highlight how clauses, which are traditionally considered to be inefficient, may actually be desired by consumers. This anomaly originates from the fact that each individual builds a mental budget by dividing the money available among the needs they intend to satisfy....