Default Heuristic

Is Choosing the Default a Sensible Heuristic?

In some cases, the preference for defaults and the asymmetric treatment of choice options may be justified. For example, there are often good reasons for retaining the status quo. First, other alternatives may be more uncertain, and the downside risk might be considered larger than the upside benefit. Second, the transaction costs associated with switching must be weighed against the potential benefits of finding a better alternative. Third, one might legitimately infer that previous choices were based on good reasons – even if those reasons can no longer be recalled. We can probably all recall an instance of trying something “new” only to discover that we have tried that option before, and to be reminded of why it became dispreferred in the first place.

However, the reliance on psychologically conspicuous defaults can bias choice because the factors that determine psychological prominence may diverge from those that determine outcome quality. For example, as Schelling (1960) noted, the attractiveness of equal division may extend well beyond its actual merits in a particular choice. Individuals may allocate retirement funds equally between bonds and stocks because equal division immediately suggests itself as a basis for choice, not because that allocation necessarily serves fundamental interests (such as growth potential and security) any better than a 40–60 or 65–35 split.