When consumers do not make an active decision: Dynamic default rules and their equilibrium effects

• 成果类型: Article
• 署名作者: Marzilli Ericson, Keith M.
• 署名单位: Boston University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2020.08.007
• 发表日期: 2020
• 页码: 369-385
• 关键词: Default effects; Subscription products; procrastination; Forgetting; Opt-out costs; Automatic renewal

摘要

Dynamic defaults for recurring purchases determine what happens to consumers enrolled in a product or service who take no action at a decision point. Consumers may face automatic renewal, automatic switching, or non-purchase defaults. Privately optimal dynamic defaults depend on the contributions of adjustment costs versus costless opt out frictions: both produce inertia under renewal defaults, but differ under non-renewal defaults. Defaults have equilibrium effects on pricing by changing the elasticity of repeat demand. Socially optimal defaults depend on firms' pricing responses as well; more elastic repeat demand restrains price increases on repeat customers and can reduce inefficient switching. (c) 2020 Elsevier Inc. All rights reserved.