Passive Choices and Cognitive Spillovers

47 Pages Posted: 21 May 2019

See all articles by Steffen Altmann

Steffen Altmann

University of Copenhagen; IZA Institute of Labor Economics

Andreas Grunewald

University of Bonn - Economic Science Area

Jonas Radbruch

IZA

Date Written: May 2019

Abstract

Passive behavior is ubiquitous - even when facing various alternatives to choose from, people commonly fail to take decisions. This paper provides evidence on the cognitive foundations of such "passive choices" and studies implications for policies that encourage active decision-making. In an experiment designed to study passive behavior, we document three main results. First, we demonstrate that scarcity of cognitive resources leads to passive behavior. Second, policies that encourage active choice succeed in reducing passivity and improve decisions in the targeted domain. Third, however, these benefits of choice-promoting policies come at the cost of negative cognitive spillovers to other domains.

Keywords: passivity, cognitive resources, scarcity, spillover effects, active decision-making, default options

JEL Classification: D91, D01, D04, C91

Suggested Citation

Altmann, Steffen and Grunewald, Andreas and Radbruch, Jonas, Passive Choices and Cognitive Spillovers (May 2019). IZA Discussion Paper No. 12337, Available at SSRN: https://ssrn.com/abstract=3390331

Steffen Altmann (Contact Author)

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Andreas Grunewald

University of Bonn - Economic Science Area ( email )

Adenauerallee 24-42
D-53113 Bonn
Germany

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