Passive Choices and Cognitive Spillovers

47 Pages Posted: 21 May 2019 Last revised: 26 Nov 2022

See all articles by Steffen Altmann

Steffen Altmann

University of Copenhagen; IZA Institute of Labor Economics

Andreas Grunewald

Frankfurt School of Finance & Management

Jonas Radbruch

IZA

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

JEL Classification: D91, D01, D04, C91

Suggested Citation

Altmann, Steffen and Grunewald, Andreas and Radbruch, Jonas, Passive Choices and Cognitive Spillovers. 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

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
115
Abstract Views
813
Rank
433,300
PlumX Metrics