'Hidden persuaders': defaults and consumer welfare

Smith, N C and Goldstein, D (2007) 'Hidden persuaders': defaults and consumer welfare. Working Paper. London Business School Centre for Marketing Working Paper.

Abstract

Defaults have been shown to have such powerful and unrecognized effects on consumer behavior that in some settings they may be considered ‘hidden persuaders’. This paper looks at defaults from the perspective of consumer welfare, consumer autonomy and marketing ethics. It surveys research on defaults and identifies three theoretical explanations for default effects: implied endorsement, cognitive biases, and effort. These theoretical explanations are informative in understanding the implications of defaults for consumer autonomy and consumer welfare. While attention has been paid to the means through which defaults can enhance consumer welfare, we show how, in certain circumstances, defaults can diminish consumer autonomy and also have adverse effects on consumer welfare. We conclude with implications for marketers, consumers, policymakers and researchers.