Keywords

active choice, defaults, implicit defaults, incentives

Abstract

Home-delivered prescriptions have no delivery charge and lower copayments than prescriptions picked up at a pharmacy. Nevertheless, when home delivery is offered on an opt-in basis, the take-up rate is only 6%. We study a program that makes active choice of either home delivery or pharmacy pick-up a requirement for insurance eligibility. The program introduces an implicit default for those who don’t make an active choice: pharmacy pickup without insurance subsidies. Under this program, 42% of eligible employees actively choose home delivery, 39% actively choose pharmacy pick-up, and 19% make no active choice and are assigned the implicit default. Individuals who financially benefit most from home delivery are more likely to choose it. Those who benefit least from insurance subsidies are more likely to make no active choice and lose those subsidies. The implicit default incentivizes people to make an active choice, thereby playing a key role in choice architecture.

Original Publication Citation

“Active Choice, Implicit Defaults, and the Incentive to Choose.” 2021. Organizational Behavior and Human Decision Processes, Vol. 163 (March 2021): 6-16 (with John Beshears, James J. Choi and David Laibson). https://doi.org/10.1016/j.obhdp.2019.02.001

Document Type

Peer-Reviewed Article

Publication Date

2021

Publisher

Organizational Behavior and Human Decision Processes

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

Download

Share

COinS