Friday, February 15, 2013

Choice without Awareness: Ethical and Policy Implications of Defaults

SMITH N. Craig, GOLDSTEIN Daniel G., JOHNSON Eric J.
Access the publisher's page 
Journal of Public Policy & Marketing 32, 2 (2013) 159-172

Defaults have such powerful and pervasive effects on consumer behavior that they could be considered “hidden persuaders” in some settings. Ignoring defaults is not a sound option for marketers or consumer policymakers. We identify three theoretical causes of default effects—implied endorsement, cognitive biases, and effort—to guide thought on the appropriate marketer and policymaker responses to the issuesposed for consumer welfare and consumer autonomy, including proposals for benign “nudges” of behavior. Defaults can be a preferred form of decision architecture; that is, other nonconscious influences on choice and an absence of established preferences can mean that active choice is not always the better alternative. We propose “smart defaults” as welfare-enhancing and market-oriented alternatives to the current practice of generally ignoring default effects. Our analysis highlights the importance of considering the process as well as the outcomes of consumer decision making, taking responsibility for consumers’ mistakes arising from misuse of defaults, and the ethical and policy implications of techniques that influence consumer choice without awareness.