Defaults and Attention: The Drop Out Effect
AbstractWhen choice options are complex, policy makers may seek to reduce decision making errors by making a high quality option the default. We show that this positive effect is at risk because such a policy creates incentives for decision makers to "drop out" by paying no attention to the decision and accepting the default sight unseen. Using decision time as a proxy for attention, we confirm the importance of this effect in an experimental setting. A key challenge for policy makers is to measure, and if possible mitigate, such drop out behavior in the field.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17988.
Date of creation: Apr 2012
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Find related papers by JEL classification:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Altmann, Steffen & Falk, Armin & Grunewald, Andreas, 2013. "Incentives and Information as Driving Forces of Default Effects," IZA Discussion Papers 7610, Institute for the Study of Labor (IZA).
- Kalaycı, Kenan & Serra-Garcia, Marta, 2012. "Complexity and Narrow Bracketing in Credit Choice," Discussion Papers in Economics 13035, University of Munich, Department of Economics.
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