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Optimal defaults with normative ambiguity

CBT Research Seminar

Daniel Reck will be giving a seminar based on his paper, 'Optimal defaults with normative ambiguity,' co-authored with Jacob Goldin

Daniel Reck is an Assistant Professor of Economics at the London School of Economics and Political Science. His co-author, Jacob Goldin, is an Assistant Professor of Law at Stanford Law School.

An abstract of their paper is given below:

Default effects are pervasive, but the reason they arise is often unclear. We study optimal policy when it is ambiguous whether an observed default effect reflects a welfare-relevant preference or a mistake by decision-makers. Within a broad class of models, determining optimal policy is impossible without resolving this normative ambiguity. Depending on the resolution, optimal policy tends in opposite directions: either minimizing the number of non-default choices or promoting active choices. We illustrate our results using data on pension contribution defaults. When selecting a non-default option reduces employee welfare by less than $160, the optimal policy promotes active choices.

If you wish to attend this seminar then please email the organiser. Please arrive 10 minutes before the start time to ensure a prompt start to the seminar.