Reducing Choice Overload without Reducing Choices

Besedeš, Tibor; Deck, Cary; Sarangi, Sudipta; Shor, Mikhael

doi:10.1162/rest_a_00506

Cited by 53 publications

(37 citation statements)

References 22 publications

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“…Similar results are found in other complex decision scenarios in the field (Iyengar and Kamenica, 2010;Sinaiko and Hirth, 2011). Nevertheless, simply reducing the number of contracts would possibly neglect the fact that consumers differ in their preferences for contract attributes (Besedeš et al, 2014). In addition, suboptimal choices may also arise from contract attributes, which are difficult to assess.…”

Section: Introductionsupporting

confidence: 75%

How Do Consumers Choose Health Insurance? An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences

Kairies-Schwarz¹,

Kokot²,

Vomhof³

et al. 2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily refl ect those of the editors. Terms of use: Documents in Ruhr Economic Papers #537

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Section: Introductionsupporting

confidence: 75%

How Do Consumers Choose Health Insurance? An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences

Kairies-Schwarz¹,

Kokot²,

Vomhof³

et al. 2014

SSRN Journal

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“…Several policy interventions aimed at increasing switching rates have been suggested in the literature, both in Medicare Part D and in other markets where consumer inertia is an issue. Such proposals typically aim to reduce the transaction costs associated with switching plans (e. g., Hoadley et al (2013)); increase attention using reminders, nudges, and other information shocks (e. g., Sinaiko et al (2013)); or reduce the complexity of the choice environment, for instance by reducing the number of available options (e. g., Frank and Lamiraud (2009), Besedeš et al (2015)).…”

Section: Simulations: Forcing Attention and Removing Switching Costsmentioning

confidence: 99%

Inattention and Switching Costs as Sources of Inertia in Medicare Part D

Heiß

McFadden

Winter³

et al. 2016

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The trend towards giving consumers choice about their health plans has invited research on how good they actually are at making these decisions. The introduction of Medicare Part D is an important example. Initial plan choices in this market were generally far from optimal. In this paper, we focus on plan choice in the years after initial enrollment. Due to changes in plan supply, consumer health status, and prescription drug needs, consumers' optimal plans change over time. However, in Medicare Part D only about 10% of consumers switch plans every year, and on average, plan choices worsen for those who do not switch. We develop a two-stage panel data model of plan choice whose stages correspond to two separate reasons for inertia: inattention and switching costs. The model allows for unobserved heterogeneity that is correlated across the two decision stages. We estimate the model using administrative data on Medicare Part D claims from 2007 to 2010. We find that consumers are more likely to pay attention to plan choice if overspending in the last year is more salient and if their old plan gets worse, for instance due to premium increases. Moreover, conditional on attention there are significant switching costs. Separating the two stages of the switching decision is thus important when designing interventions that improve consumers' plan choice.

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“…Adults of all ages benefit from smaller choice sets, which have been associated with better decisions and higher post-choice satisfaction (Besedeš et al 2012;Botti and Iyengar 2006;Hanoch et al 2011;Tanius et al 2009). A 'tournament' strategy for introducing subsets of options may also improve older adults' decisions (Besedeš et al 2015). Thus various intervention strategies may be useful for confronting low motivation among decision makers.…”

Section: Interventions Targeting Cognitive Deliberationmentioning

confidence: 99%

Aging and Competence in Decision Making

Bruin¹

2017

Oxford Scholarship Online

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This chapter reviews recent developments in research on decision making competence across the lifespan. It highlights age differences in four main skills that may contribute to making good decisions, namely cognitive deliberation, experience, emotions, and motivation. Although fluid cognitive abilities that underlie cognitive deliberation are known to decline with age, the others follow different paths with age. The chapter also discusses further research steps and potential interventions for targeting cognitive deliberation, experience, emotions, and motivation, so as to promote better decisions and associated life outcomes across the lifespan.

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Reducing Choice Overload without Reducing Choices

Cited by 53 publications

References 22 publications

How Do Consumers Choose Health Insurance? An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences

How Do Consumers Choose Health Insurance? An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences

Inattention and Switching Costs as Sources of Inertia in Medicare Part D

Aging and Competence in Decision Making

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