Sublime

small changes in context can greatly influence schoolchildren, just as they can greatly influence adults. The influence can be exercised for better or for worse.

Herbert Simon calls bounded rationality.10 Bounded rationality means that people make quite reasonable decisions based on the information they have.

The point is that high take-up of the default option cannot be viewed as a success in and of itself.

Lock-in is the decreased likelihood to search for other options, or change to another option, once an investment in something has been made. The initial investment, called a setup cost, can be big or small. A form. An entrance fee. The hassle of creating an online account. A down payment on a car. The greater the setup costs, the less likely we are

As psychologist Gerd Gigerenzer and his colleagues have documented, there are many situations where heuristics make better predictions than more complicated methods. This is called the less-is-more effect.7

As a new point of view we turn to bounded rationality, a departure from the mainstream tradition. We no longer can assume that every agent is a perfect calculator. This point of view is given a great deal of emphasis by Herbert Simon. Simon argued that people do not maximize. When they’re forecasting the future, they do not perform the task of

it. If the default fund is terrific and can work well for most participants, or if the choosers are likely to blunder, then it might make sense to encourage people to select the default. If the creators of the default fund are not really experts, if the choosers know a lot, and if the situations of different choosers are relevantly different, then