terms_of_service

Terms of Disservice

Uma_Karmarkar
Uma Karmarkar
Assistant Professor, UCSD
Nancy Volkers
Writer

Editor’s Note: Technically, I’m a lawyer. I even spent eleven months working for a software group prosecuting copyright infirngement. I have never once read an entire Terms of Service (TOS) Agreement.

I usually “skim” them, picking out a couple key words at the top of a few paragraphs... I did once get mad enough at Adobe to write them a letter proposing they change their TOS to “We will (expletive) you and you will (expletive)ing like it.”  I didn’t hear back from them, nor did I read their TOS.  

I’d always thought I was alone. I’m not. (As far as the not-reading-TOS thing, that is. Still one of the few ex-lawyers writing expletive filled letters to anonymous corporations.) Few of us read the TOS. Let’s learn why.

 

We’ve all seen them: Terms of Service. Digital pages of legalese about what our rights and responsibilities are, how the company uses our information and who knows what else, really. Most of us don’t know because we don’t read through these terms — we click “I agree” and move on to download the software, trade the stocks or post artfully lit photos of our meals.

In a recent NBC/Wall Street Journal poll of 1,000 Americans, 74% agreed that it wasn’t OK for social media companies to collect personal data for targeted advertising. But 91% of people consent to Terms of Service agreements without reading them at all. And some of them certainly allow companies to collect personal information; otherwise, we wouldn’t be seeing website ads today for that thingamajig we were reading about yesterday.

What’s going on? Why are we avoiding important information that can help us make choices about things that matter?

One of the psychological factors that can contribute to avoiding Terms of Service — and other complicated documents or concepts — has to do with how people feel about feeling uncertain. Spoiler alert: They don’t like it.

 

One of the psychological factors that can contribute to avoiding Terms of Service has to do with how people feel about feeling uncertain.

We can draw on language from economics to understand this situation better. In a risky situation, we know the probabilities of different outcomes but we don’t know what the outcome will be. This is like a fair coin flip; we know there are two possible outcomes (heads or tails) and each outcome has a 50% chance of happening, but since we can’t foresee the future, we don’t know which outcome will occur.

Unlike a coin flip, however, many real-world situations include a second layer of uncertainty, called ambiguity. In ambiguous situations, we don’t even know the specific probabilities of the outcomes. Indeed, we may not know what the possible outcomes are or how many there might be. This is more like eating at a new restaurant; we don’t know what they’ll serve, and we don’t know the chances of the food being good or bad. Therefore, we have no idea how to predict how our meal will turn out.

 

Unlike a coin flip, however, many real-world situations include a second layer of uncertainty, called ambiguity.

Ambiguous situations involve missing information or ignorance. They make us feel uncertain. And people generally find this kind of uncertainty aversive.

Indeed, “ambiguity aversion” is a well-studied phenomenon in behavioral economics and psychology. Nevertheless, people still make decisions under uncertainty all the time, and much less is known about how we use the information that we do have in these situations.

In my research (here and here), we looked at ambiguous financial investment situations in which people know that there is missing information. In this case, the clear and interpretable information they have has two kinds of value. First, it helps them estimate the probabilities of different outcomes. Second, it can make them feel more certain about our judgments. Even if people still don’t know what will happen, more information makes them feel less ignorant. And here’s the important part: Feeling less ignorant, and therefore more certain, is valuable.

 

Even if people still don’t know what will happen, more information makes them feel less ignorant … Feeling less ignorant … is valuable.

In fact, even unfavorable information is valuable if it makes us feel more certain. And the more certain – or less ignorant –people feel, the more likely they are to engage with an uncertain situation or, in our case, pay for an uncertain financial prospect.

If info is good, why are TOS bad?

But if we care so much about feeling certain, why don’t we read Terms of Service agreements before signing them? The critical factor here is that receiving some forms of information can make us feel more certain. If we’re given complex information we don’t understand, we can’t use it to help make our decision. If there’s so much information that it’s overwhelming, we might just shut down altogether.

Providing complicated information, and loads of it, can actually make people feel more ignorant — “I had no idea there was ALL of this stuff I didn’t know about getting an Instagram account … I thought it was just a cool place to post photos!”

If we’re given complex information we don’t understand, we can’t use it to help make our decision.

So if we glance at the Terms of Service and realize they seem quite complicated, we may check the “I accept” box simply to avoid a situation where we’ll spend a lot of time reading something that will leave us feeling more ignorant and uncertain than before.

If we start wading through the Terms, we’ll be less likely to check that box. Studies – like this and this and give up your first born child – have shown that the more time someone spends reading these agreements, the less likely they are to decide to move forward with whatever it is. That’s because the sheer volume of information, combined with its complexity, makes people feel more ignorant than they did before.
One of the most powerful things I learned in my research is that there’s a silver lining to unfavorable information, as long as it’s presented clearly. It’s so important for us to feel knowledgeable that negative information can help us make a decision, just because it keeps us from feeling ignorant! What bothers us more than knowing we might not win? Not understanding how the game is played.

 

It’s so important for us to feel knowledgeable that negative information can help us make a decision, just because it keeps us from feeling ignorant!

If you want satisfied customers, a key element in that is helping people feel more certain with their choices. Don’t just offer a fire hose of information. Be informative. Use straightforward language that speaks to your customer’s uncertainties. Our treatment of Terms of Service makes the importance of the distinction between “information” and “informative information” very clear.

 

Uma_Karmarkar
Uma Karmarkar
Assistant Professor, UCSD
Nancy Volkers
Writer

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