Policy makers and scholars—both lawyers and economists—have long pon-
dered the optimal design of default rules. From the classic works on “mimicking”
defaults for contracts and corporations to the modern rush to set “sticky” default
rules to promote policies as diverse as organ donation, retirement savings, consumer
protection, and data privacy, the optimal design of default rules has featured as a
central regulatory challenge. The key element driving the design is opt-out costs—
how to minimize them, or, alternatively, how to raise them to make the default sticky.
Much of the literature has focused on “mechanical” opt-out costs—the effort people
incur to select a nondefault alternative. This focus is too narrow. A more important
factor affecting opt-out is information—the knowledge people must acquire to make
informed opt-out decisions. But, unlike high mechanical costs, high information
costs need not make defaults stickier; they may instead make the defaults “slippery.”
This counterintuitive claim is due to the phenomenon of uninformed opt-out, which
we identify and characterize. Indeed, the importance of uninformed opt-out requires
a reassessment of the conventional wisdom about Nudge and asymmetric or liber-
tarian paternalism. We also show that different defaults provide different incentives
to acquire the information necessary for informed opt-out. With the ballooning use
of default rules as a policy tool, our information-costs theory provides valuable guid-
ance to policy makers.
Bar-Gill, Oren and Ben-Shahar, Omri
"Rethinking Nudge: an Information-Costs Theory of Default Rules,"
University of Chicago Law Review: Vol. 88:
3, Article 1.
Available at: https://chicagounbound.uchicago.edu/uclrev/vol88/iss3/1