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Passive Choices and Cognitive Spillovers

Author

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  • Altmann, Steffen

    () (IZA and University of Copenhagen)

  • Grunewald, Andreas

    () (Goethe University Frankfurt)

  • Radbruch, Jonas

    () (IZA)

Abstract

Passive behavior is ubiquitous - even when facing various alternatives to choose from, people commonly fail to take decisions. This paper provides evidence on the cognitive foundations of such "passive choices" and studies implications for policies that encourage active decision-making. In an experiment designed to study passive behavior, we document three main results. First, we demonstrate that scarcity of cognitive resources leads to passive behavior. Second, policies that encourage active choice succeed in reducing passivity and improve decisions in the targeted domain. Third, however, these benefits of choice-promoting policies come at the cost of negative cognitive spillovers to other domains.

Suggested Citation

  • Altmann, Steffen & Grunewald, Andreas & Radbruch, Jonas, 2019. "Passive Choices and Cognitive Spillovers," IZA Discussion Papers 12337, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12337
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    Cited by:

    1. Atasoy, Ayse Tugba & Madlener, Reinhard, 2020. "Default vs. Active Choices: An Experiment on Electricity Tariff Switching," FCN Working Papers 7/2020, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

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    More about this item

    Keywords

    passivity; cognitive resources; scarcity; spillover effects; active decision-making; default options;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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