Title
Default options and social welfare : opt in versus opt out
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Tübingen ,
Subject
Economics
Source (journal)
Journal of institutional and theoretical economics. - Tübingen
Volume/pages
169(2013) :3 , p. 468-489
ISSN
0932-4569
ISI
000325443400005
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
We offer a social-welfare comparison of the two most prominent default options opt in and opt out using a two-period model of localized competition. We demonstrate thatwhen consumers stick to the default option, the prevailing default policy shapes firms ability to collect and use customer information, and affects their pricing strategy and entry decision differently.The free-entry analysis reveals that fewer firms enter under opt out as competition becomes harsher, and that opt out is the socially preferred default option. (JEL: D11)
E-info
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