The Default Effect is the tendency to go with the status quo, even when a different option would be better. The default effect is a concept within the study of nudge theory.
- We tend to generally accept the default option.
- Making an option a default increases the likelihood that such an option is chosen.
- We tend to exhibit a preference for the default option when presented with a selection of choices.
- Offering up a default option gives us a way of influencing people’s decisions.
Effects on Agents
If an agent is indifferent or conflicted between options, it may involve too much cognitive effort to base a choice on explicit evaluations. In that case, he or she might disregard the evaluations and choose according to the default heuristic instead, which simply states “if there is a default, do nothing about it”.
If an agent faces costs when diverging from a default that surmount the possible benefits from switching to another option, then it is rational to stick with the default option.
If an agent evaluates options on multiple dimensions, then the default functions as a reference point from which some dimensions are interpreted as losses and therefore becomes more important for the choice. This loss aversion explanation of the default effect.
Impacts of Default Effects
One of the theories behind the default effect is that humans are hardwired to avoid loss. We feel a strong aversion to any kind of loss. This aversion is so strong that it can override our logical thinking and lead us to stick to what seems like the safest path.
Another theory relates to the cognitive effort needed to consider alternative options. It’s much easier to go with what’s right in front of us, compared to researching and evaluating other potential choices.
The Default Effect can lead to suboptimal choices unless we’re aware of its influence. By understanding this behavioral quirk, we can make more informed decisions and encourage organizations to prioritize transparency and consumer well-being in their default settings.