Defaults and Decisions: Choice Architecture and Consumer Opt-Out

Why do consumers accept defaults (preset or suggested options)? This paper estimates a structural model that disentangles two frictions underlying default adherence: a deviation cost (the disutility when the final choice differs from the consumer’s ideal) and an opt-out cost (the effort to override the default). I estimate the model on 8.6 million tipping decisions from NYC Yellow taxi trips. A stated-preference survey identifies consumer tipping preferences independently of defaults. The central finding is friction complementarity: 84% of default adherence arises from the interaction of both frictions; remove either friction and the remaining one alone cannot sustain default adherence. Structural parameters are approximately stable when default options change, consistent with defaults channeling behavior through choice frictions rather than reshaping preferences. Counterfactual analysis shows that adding a 15% tip option below the existing 20%–25%–30% menu captures 69% of the achievable consumer welfare gain at a 5.4% revenue cost. This paper was accepted by Dube, Jean-Pierre, marketing. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.05272 .