Active Choosing or Default Rules? The Policymaker's Dilemma

Abstract

It is important for people to make good choices about important matters, such as health insurance or retirement plans. Sometimes it is best to ask people to make active choices. But in some contexts, people are busy or aware of their own lack of knowledge, and providing default options is best for choosers. If people elect not to choose or would do so if allowed, they should have that alternative. A simple framework, which assesses the costs of decisions and the costs of errors, can help policymakers decide whether active choosing or default options are more appropriate.

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