Investigating the origin and consequences of endogenous default options in repeated economic choices.

Abstract

Classical value-based decision theories state that economic choices are solely based on the value of available options. Experimental evidence suggests, however, that individuals choices are biased towards default options, prompted by the framing of decisions. Although the effects of default options created by exogenous framing - such as how choice options are displayed - are well-documented, little is known about the potential effects and properties of endogenous framing, that is, originating from an individuals internal state. In this study, we investigated the existence and properties of endogenous default options in a task involving choices between risky lotteries. By manipulating and examining the effects of three experimental features - time pressure, time spent on task and relative choice proportion towards a specific option -, we reveal and dissociate two features of endogenous default options which bias individuals choices: a natural tendency to prefer certain types of options (natural default), and the tendency to implicitly learn a default option from past choices (learned default). Additional analyses suggest that while the natural default may bias the standard choice process towards an option category, the learned default effects may be attributable to a second independent choice process. Overall, these investigations provide a first experimental evidence of how individuals build and apply diverse endogenous default options in economic decision-making and how this biases their choices.