Default Effects, Transaction Costs, and Imperfect Information

Chris M. Wilson, Luke Garrod and Alistair Munro
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Chris M. Wilson: School of Business and Economics

No 12-16, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

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.

Pages: 8 pages
Date: 2012-12
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Journal Article: Default effects, transaction costs, and imperfect information (2013)
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