Keywords
default effects, transaction costs, consumer choice
Abstract
If transaction costs are small, standard economic theory would suggest that defaults should have little impact on economic outcomes. Agents with well-defined preferences will opt out of any default that does not maximize their utility, regardless of the nature of the default. In practice, however, defaults can have quite sizeable effects on economic outcomes. Recent research has highlighted the important role that defaults play in a wide range of settings: organ donation decisions (Johnson and Goldstein 2003; Abadie and Gay 2004), car insurance plan choices (Johnson et al. 1993), car option purchases (Park, Jun, and McInnis 2000), and consent to receive e-mail marketing (Johnson, Bellman, and Lohse 2003).
Original Publication Citation
Policy in a Changing Environment, Cambridge: National Bureau of Economic Research, 2009, pp. 167-200. http://www.nber.org/chapters/c4539.pdf
BYU ScholarsArchive Citation
Beshears, John; Choi, James J.; Laibson, David; and Madrian, Brigitte C., "The Importance of Default Options for Retirement Saving Outcomes: Evidence from the United States" (2008). Faculty Publications. 9061.
https://scholarsarchive.byu.edu/facpub/9061
Document Type
Peer-Reviewed Article
Publication Date
2008
Publisher
Cambridge: National Bureau of Economic Research
Language
English
College
Marriott School of Business
Department
Finance
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