Defaults and Attention: The Drop Out Effect

Policy makers may try to reduce decision making errors by making a high quality option the default option. The positive effect of this policy can be undermined by “drop out” behavior in which the default is accepted hastily and with little regard for personal suitability. We measure the drop out effect in an experimental setting using response time as a proxy for attention. We find that this effect can completely offset the benefits of a high quality default. We use a model of costly attention to indicate conditions under which this drop out effect is rational and find moderate evidence that these conditions are satisfied.