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The Behavioral Foundations of Default Effects: Theory and Evidence from Medicare Part D

By Zarek Brot-Goldberg, Timothy Layton, Boris Vabson, and Adelina Yanyue Wang

American Economic Review, October 2023

We show in two natural experiments that default rules in Medicare Part D have large, persistent effects on enrollment and drug utilization of low-income beneficiaries. The implications of this phenomenon for welfare and optimal policy depend on the sensit...