Question

In which of the following examples would we see the influence of a default option? (You can choose more than one.) [LO 23.4] a. A doctor recommends continuing treatment, but the ultimate decision of whether to continue treatment is left up to the patient. b. A website automatically checks the option "share my activity with my friends on Facebook" when users sign up. c. Pets from an animal shelter are automatically spayed or neutered unless the owner would prefer them not to be. d. A mobile phone user has to enter a choice at start-up between installing a special feature or not. The user is informed that most people choose to install the special feature.

Short answer

Options b and c exhibit the influence of a default option.

Step-by-step solution

Understanding the Default Option

A default option is a pre-selected choice or setting that remains in place unless an individual chooses to opt out or change it. The presence of a default influences decision making by providing a path of least resistance.

Analyzing Option a

In the scenario where a doctor recommends continuing treatment, but the decision is left to the patient, there is no default option presented. The decision rests solely on the patient's choice without a pre-set option.

Analyzing Option b

In this case, the website automatically selects the option "share my activity with my friends on Facebook." This influences user decisions by requiring them to actively deselect the option if they do not wish to share their activity. This is an example of a default option.

Analyzing Option c

Pets from an animal shelter are automatically spayed or neutered unless the owner opts out. This is another example of a default option, as the procedure is set to occur unless the owner actively chooses otherwise.

Analyzing Option d

The mobile phone user must make an active choice about installing a feature, with the information that many users choose to install it. While social influence is present, no default selection occurs because the user must make an active choice.

Key concepts

Decision Making

Decision making is a crucial aspect of our daily lives, involving the process of making choices by identifying and assessing the available options. It often involves considering various factors such as preferences, objectives, and possible outcomes.
The presence of a default option can significantly influence decision making by serving as the simplest and often quickest choice. For instance, if a default option is already selected, many people tend to go with it instead of actively choosing an alternative.
This behavior occurs because:

• Defaults provide an effortless route that requires no extra effort.
• People may perceive the pre-selected option as the recommended or safest choice.

By understanding how defaults impact decision making, individuals and organizations can make more informed choices about setting defaults or choosing whether to conform to them.

Behavioral Economics

Behavioral economics studies how psychological, cognitive, and emotional factors affect economic decisions. It examines why people sometimes make irrational choices, diverging from the predictions of classical economic theories.
One key concept in behavioral economics is the power of default options. Defaults leverage human tendencies such as inertia and loss aversion, where individuals prefer to avoid losses rather than acquiring similar gains.
These phenomena mean that:

• People are less likely to change from the default setting even if a better option exists.
• Defaults can manipulate behavior to increase participation in beneficial programs or desired outcomes.

Behavioral economics highlights how by effectively setting defaults, policymakers and businesses can subtly guide decision making without restricting freedom of choice.

Pre-selected Choice

A pre-selected choice or default option is a setting or choice already selected for the user in decision contexts. It remains unless the user consciously opts out or makes an alternative selection.
Pre-selected choices are powerful in steering behavior because they reduce the cognitive load on the decision maker. People tend to stick with the path of least resistance, especially when the benefits or drawbacks of change aren't immediately clear.
Consider these effects:

• Users often trust the default as an implicit recommendation.
• Defaults minimize the perceived effort in decision making.

Understanding pre-selected choices empowers consumers and organizations by making them aware of underlying influences in scenarios where defaults are present.

Opt-out Mechanism

An opt-out mechanism is a system where the default position is active unless a person actively chooses to change it. This contrasts with an opt-in system, where participation requires a conscious action to join.
With an opt-out mechanism, the effects of defaults become starkly evident, as they often lead to higher rates of participation or compliance due to the default being the easier option to maintain.
Key characteristics include:

• Higher initial participation due to the default being automatically applied.
• Participants must take action to decline or change from the default state.

Opt-out mechanisms are frequently used in areas such as organ donation systems and company retirement plans, where maximizing participation is beneficial to the individual or society without imposing mandates.