Optimal defaults with normative ambiguity

Dr Daniel Reck is an Assistant Professor of Economics at LSE. He will be giving a seminar entitled “Optimal defaults with normative ambiguity”.The paper is co-authored by J.S Goldin of Stanford law School and NBER. The abstract of the paper appears below:

Default effects are pervasive, but the reason they arise is often unclear. We study optimal policy when it is ambiguous whether an observed default effect reflects a welfare-relevant preference or a mistake by decision-makers. Within a broad class of models, determining optimal policy is impossible without resolving this normative ambiguity. Depending on the resolution, optimal policy tends in opposite directions: either minimizing the number of non-default choices or promoting active choices. We illustrate our results using data on pension contribution defaults. When selecting a non-default option reduces employee welfare by less than $160, the optimal policy promotes active choices

Please report to Main Reception, Said Business School, and ask for Pauline Simpson

Please try to arrive 10 minutes before the start of the seminar in order to ensure a prompt start.