Default Effects, Transaction Costs, and Imperfect Information
AbstractWe develop a decision framework with imperfect information to analyze the effects of transaction costs on the tendency for individuals to remain with a default option. We demonstrate how transaction costs can be a more important source of such default effects than commonly thought. A further, potentially surprising result shows that transaction costs are able to explain why some forms of default effects increase with the number of options.
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Bibliographic InfoPaper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 12-16.
Length: 8 pages
Date of creation: Dec 2012
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Other versions of this item:
- Wilson, Chris M. & Garrod, Luke & Munro, Alistair, 2013. "Default effects, transaction costs, and imperfect information," Economics Letters, Elsevier, vol. 119(2), pages 213-215.
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
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