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  • 2022
  • Article
  • Behavioral Science & Policy

How to Choose a Default

By: John Beshears, Richard T. Mason and Shlomo Benartzi
  • Format:Print
  • | Pages:15
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Abstract

We have developed a model for setting a default when a population is choosing among ordered choices—that is, ones listed in ascending or descending order. A company, for instance, might want to set a default contribution rate that will increase employees’ average contributions to a retirement savings plan. A key input of the model is the distribution of latent options—the percentages of a population that select each available choice in the absence of a preset default. The model treats the default as an attraction point that causes some people to shift from their latent preference toward the default. It specifies the strength of each possible default’s pull on each latent option and thereby points policymakers to the default most likely to achieve a desired aim. We tested our model using data from field experiments relating to retirement savings. In addition to presenting the results, which support the model’s validity, we discuss how the model relates to prior empirical evidence on defaults.

Keywords

Nudge; Choice Architecture; Behavioral Economics; Behavioral Science; Default; Savings; Decision Choices and Conditions; Behavior; Motivation and Incentives

Citation

Beshears, John, Richard T. Mason, and Shlomo Benartzi. "How to Choose a Default." Behavioral Science & Policy 8, no. 1 (2022): 1–15.
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About The Author

John Beshears

Negotiation, Organizations & Markets
→More Publications

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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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