EMBR Seminar with Dr Katharina Momsen (University Of Heidelberg)

How do defaults affect information acquisition and processing?

Abstract
We investigate whether default nudges affect the willingness of decision-makers to acquire, process and consider information about the choice options in a discrete choice situation. In an online experiment, where about 2,300 participants choose between two donation options worth $100, we vary the availability of information on the options and the presence of a default or, more generally, a preselected option. We find that the presence of a preselected option -- self-selected or exogenously determined as a default nudge -- induces decision-makers to remain ignorant, as they request less information on the choice options when given the option to do so. Moreover, we show that the presence of such a status quo in the form of a preselected option makes participants more likely to disregard available information than in the absence of a preselected option. In our setting, these results cannot be explained by rational inattention or laziness. Taken together, our findings show that default nudges may not be as innocent as often assumed, and more generally, they highlight the need for choice architects, regulators, legislation, and management to take the consequences of a preselected option, such as a default nudge, on information acquisition and processing into account when considering the design of a decision situation.

About Dr Katharina Momsen
Dr Momsen a Postdoc at the University of Heidelberg. Her research interests lie mainly in experimental and behavioral economics, with applications to environmental economics, industrial organization, and public economics.