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Defaults and Attention: The Drop Out Effect

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  • Andrew Caplin
  • Daniel Martin

Abstract

Policy makers may try to reduce decision making errors by making a high quality option the default option. The positive effect of this policy can be undermined by ?drop out? behavior in which the default is accepted hastily and with little regard for personal suitability. We measure the drop out effect in an experimental setting using response time as a proxy for attention. We find that this effect can completely offset the benefits of a high quality default. We use a model of costly attention to indicate conditions under which this drop out effect is rational and find moderate evidence that these conditions are satisfied.

Suggested Citation

  • Andrew Caplin & Daniel Martin, 2017. "Defaults and Attention: The Drop Out Effect," Revue économique, Presses de Sciences-Po, vol. 68(5), pages 747-755.
    • Handle: RePEc:cai:recosp:reco_pr3_0094
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    Cited by:

    1. Matveenko, Andrei & Mikhalishchev, Sergei, 2021. "Attentional role of quota implementation," Journal of Economic Theory, Elsevier, vol. 198(C).
    2. Asen Ivanov, 2021. "Optimal pension plan default policies when employees are biased," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(3), pages 583-596, June.
    3. Steffen Altmann & Armin Falk & Paul Heidhues & Rajshri Jayaraman & Marrit Teirlinck, 2019. "Defaults and Donations: Evidence from a Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 808-826, December.
    4. McConnell, Margaret, 2013. "Behavioral economics and aging," The Journal of the Economics of Ageing, Elsevier, vol. 1, pages 83-89.
    5. Yang, Jiaqi, 2025. "Status quo bias with choice overload," Games and Economic Behavior, Elsevier, vol. 149(C), pages 170-186.
    6. Dewan, Ambuj & Neligh, Nathaniel, 2020. "Estimating information cost functions in models of rational inattention," Journal of Economic Theory, Elsevier, vol. 187(C).
    7. David J. Freeman & Hanh T. Tong & Lanny Zrill, 2021. "Default-Setting and Default Bias: Does the Choice Architect Matter?," Discussion Papers dp21-08, Department of Economics, Simon Fraser University.
    8. Tse, Alan & Friesen, Lana & Kalaycı, Kenan, 2016. "Complexity and asset legitimacy in retirement investment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 60(C), pages 35-48.
    9. Altmann, Steffen & Falk, Armin & Grunewald, Andreas, 2013. "Incentives and Information as Driving Forces of Default Effects," IZA Discussion Papers 7610, IZA Network @ LISER.
    10. Callen, Michael & Blumenstock, Joshua & Ghani, Tarek, 2016. "Mobile-izing Savings with Automatic Contributions: Experimental Evidence on Present Bias and Default Effects in Afghanistan," CEPR Discussion Papers 11400, C.E.P.R. Discussion Papers.
    11. Kenan Kalaycı & Marta Serra-Garcia, 2016. "Complexity and biases," Experimental Economics, Springer;Economic Science Association, vol. 19(1), pages 31-50, March.
    12. Caplin, Andrew, 2014. "Rational inattention and revealed preference: The data-theoretic approach to economic modeling," Research in Economics, Elsevier, vol. 68(4), pages 295-305.
    13. Martin, Daniel & Muñoz-Rodriguez, Edwin, 2022. "Cognitive costs and misperceived incentives: Evidence from the BDM mechanism," European Economic Review, Elsevier, vol. 148(C).
    14. Taha Choukhmane, 2025. "Default Options and Retirement Saving Dynamics," American Economic Review, American Economic Association, vol. 115(11), pages 3749-3787, November.

    More about this item

    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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