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Defaults and Attention: The Drop Out Effect

Andrew Caplin, Daniel J. Martin

NBER Working Paper No. 17988
Issued in April 2012
NBER Program(s):Public Economics

When 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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Document Object Identifier (DOI): 10.3386/w17988

Published: Andrew Caplin & Daniel Martin, 2017. "Defaults and Attention: The Drop Out Effect," Revue économique, vol 68(5).

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