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Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

Joshua Blumenstock, Michael Callen and Tarek Ghani

American Economic Review, 2018, vol. 108, issue 10, 2868-2901

Abstract: We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effect equivalent to providing a 50% matching incentive. We then use a series of experimental interventions to differentiate between explanations for the default effect, which we conclude is driven largely by present-biased preferences and the cognitive cost of thinking through different savings scenarios. Default assignment also changes employees' attitudes toward saving, and makes them more likely to actively decide to save after the study concludes.

JEL-codes: C93 D14 D91 O12 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20171676
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