Default effects, transaction costs, and imperfect information

Chris M. Wilson, Luke Garrod and Alistair Munro

Economics Letters, 2013, vol. 119, issue 2, 213-215

Abstract: We develop a decision framework with imperfect information to analyze the effects of transaction costs on the tendency for individuals to remain with a default option. We demonstrate how transaction costs can be a more important source of such default effects than commonly thought. A further, potentially surprising result shows that transaction costs are able to explain why some forms of default effects increase with the number of options.

Keywords: Default effect; Transaction cost; Imperfect information (search for similar items in EconPapers)
JEL-codes: D03 D83 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Working Paper: Default Effects, Transaction Costs, and Imperfect Information (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:119:y:2013:i:2:p:213-215

DOI: 10.1016/j.econlet.2013.02.022

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