Academy of Management Proceedings
David Tannenbaum
Department of Management
Abstract
In selecting a default option, policymakers must often choose between a passive default that does nothing and a pro-active default that does (non-enrollment and automatic enrollment defaults). For example, some companies automatically enroll their employees into a retirement savings plan, while other companies do not. While both non-enrollment and automatic enrollment have a pronounced impact on choices, the existing evidence suggests that default behavior is especially pronounced under automatic enrollment. The current studies explain this differential influence by appealing to an information asymmetry — automatic enrollment usually signals a policymakers? reasons for acting, while non-enrollment is usually viewed as uninformative. As a result, automatic enrollment defaults can provide additional information that serves as an input into making a default decision.
