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Publication

Default options and social welfare: Opt in versus opt out

Journal Contribution - Journal Article

We offer a social-welfare comparison of the two most prominent default options - opt in and opt out - using a two-period model of localized competition. We demonstrate thatwhen consumers stick to the default option, the prevailing default policy shapes firms' ability to collect and use customer information, and affects their pricing strategy and entry decision differently.The free-entry analysis reveals that fewer firms enter under opt out as competition becomes harsher, and that opt out is the socially preferred default option. © 2013 Mohr Siebeck.
Journal: Journal of Institutional and Theoretical Economics
ISSN: 0932-4569
Issue: 3
Volume: 169
Pages: 468 - 489
Publication year:2013
BOF-keylabel:yes
IOF-keylabel:yes
BOF-publication weight:0.1
CSS-citation score:1
Authors:International
Authors from:Higher Education