Optimal Default Options

B. Douglas Bernheim and Jonas Mueller Gastell

No 28254, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Previous studies of optimal default options demonstrate that either opt-out minimization or maximization is optimal under restrictive conditions. We obtain a general characterization of the solution by studying optimal defaults when one of the problem's parameters approaches a limiting value. We interpret these “asymptotic optima” as approximate optima for non-limiting cases and justify this interpretation through numerical simulations. When the designer and choosers agree about the activity's value, simple forms of weighted opt-out minimization are asymptotically optimal. Additional results encompass Pigouvian fees, normative ambiguity, and cases in which the designer and choosers disagree about the activity's value.

JEL-codes: D10 D11 D14 (search for similar items in EconPapers)
Date: 2020-12
Note: PE
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Citations: View citations in EconPapers (2)

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