The Timing of Choice-Enhancing Policies
Takeshi Murooka () and
No 49, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition
Recent studies investigate policies motivating consumers to make an active choice as a way to protect unsophisticated consumers. We analyze the optimal timing of such choice-enhancing policies when a firm can strategically react to them. In our model, a firm provides a contract with automatic renewal. We show that a policy intending to enhance consumers choices when they choose a contract can be detrimental to welfare. By contrast, a choice-enhancing policy at the time of contract renewal increases welfare more robustly. Our results highlight that policies should be targeted in timing to the actual choice inefficiency.
Keywords: active choice; automatic renewal; automatic enrollment; procrastination; consumer naivete; present bias (search for similar items in EconPapers)
JEL-codes: D03 D18 D21 D40 L51 (search for similar items in EconPapers)
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Journal Article: The timing of choice-enhancing policies (2018)
Working Paper: The Timing of Choice-Enhancing Policies (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:49
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