School of Information
102 South Hall
University of California, Berkeley
NBER Working Papers and Publications
|July 2017||Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan|
with Michael Callen, Tarek Ghani: w23590
We report on an experiment examining why default options impact behavior. Working with one of the largest private firms in Afghanistan, we randomly assigned each of 949 employees to different variants of a new default savings account. Employees assigned a default contribution rate of 5% are 40 percentage points more likely to contribute than employees assigned to a default contribution rate of zero; to achieve this effect through financial incentives alone would require a 50% match from the employer. Our design permits us to rule out several common explanations for default effects, including employer endorsement, employee inattention, and a lack of awareness about how to switch. Instead, we find evidence that the default effect is driven largely by a combination of present-biased preferenc...