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Communicating through Defaults

Author

Listed:
  • Steffen Altmann

    (University of Wuerzburg and University of Copenhagen)

  • Armin Falk

    (University of Bonn)

  • Andreas Grunewald

    (Frankfurt School of Finance and Management)

Abstract

We report the results of two laboratory experiments and a representative survey that investigate how default effects are shaped by information asymmetries and strategic incentives. We document that defaults are more informative when the interests of default setters and decision makers are more closely aligned. Decision makers’ propensity to accept defaults depends, both, on the alignment of interests and the quality of their information. In a second experiment, we demonstrate that decision makers are more likely to follow defaults than to accept (equally informative) advice. Complementary evidence from a representative survey underlines that consumers commonly perceive defaults as being set strategically.

Suggested Citation

  • Steffen Altmann & Armin Falk & Andreas Grunewald, 2025. "Communicating through Defaults," The Review of Economics and Statistics, MIT Press, vol. 107(1), pages 256-268, January.
    • Handle: RePEc:tpr:restat:v:107:y:2025:i:1:p:256-268
    DOI: 10.1162/rest_a_01260
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