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  • March 2021
  • Article
  • Organizational Behavior and Human Decision Processes

Active Choice, Implicit Defaults, and the Incentive to Choose

By: John Beshears, James J. Choi, David Laibson and Brigitte C. Madrian
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Abstract

Home-delivered prescriptions have no delivery charge and lower copayments than prescriptions picked up at a pharmacy. Nevertheless, when home delivery is offered on an opt-in basis, the take-up rate is only 6%. We study a program that makes active choice of either home delivery or pharmacy pick-up a requirement for insurance eligibility. The program introduces an implicit default for those who don’t make an active choice: pharmacy pick-up without insurance subsidies. Under this program, 42% of eligible employees actively choose home delivery, 39% actively choose pharmacy pickup, and 19% make no active choice and are assigned the implicit default. Individuals who financially benefit most from home delivery are more likely to choose it. Those who benefit least from insurance subsidies are more likely to make no active choice and lose those subsidies. The implicit default incentivizes people to make an active choice, thereby playing a key role in choice architecture.

Keywords

Active Choice; Defaults; Implicit Defaults; Incentives; Consumer Behavior; Decision Choices and Conditions; Motivation and Incentives

Citation

Beshears, John, James J. Choi, David Laibson, and Brigitte C. Madrian. "Active Choice, Implicit Defaults, and the Incentive to Choose." Organizational Behavior and Human Decision Processes 163 (March 2021): 6–16.
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About The Author

John Beshears

Negotiation, Organizations & Markets
→More Publications

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    • March 2025
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    Automatic Enrollment with a 12% Default Contribution Rate

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    • 2024
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    Smaller than We Thought? The Effect of Automatic Savings Policies

    By: James J. Choi, David Laibson, Jordan Cammarota, Richard Lombardo and John Beshears
More from the Authors
  • Optimal Illiquidity By: John Beshears, James J. Choi, Christopher Clayton, Christopher Harris, David Laibson and Brigitte C. Madrian
  • Automatic Enrollment with a 12% Default Contribution Rate By: John Beshears, Ruofei Guo, David Laibson, Brigitte C. Madrian and James J. Choi
  • Smaller than We Thought? The Effect of Automatic Savings Policies By: James J. Choi, David Laibson, Jordan Cammarota, Richard Lombardo and John Beshears
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