Authors
Ben Handel (Gilbert Center) and Joshua Schwartzstein
In a number of situations, there is strong evidence that people do not translate readily available information into the knowledge that would help them make better decisions. For example, people may choose a health insurance plan that costs $500 per year more in premiums in order to obtain a deductible that is $250 lower—despite having access to open enrollment booklets containing relevant information (Handel 2013; Bhargava, Loewenstein, and Sydnor 2017). People buy branded drugs over equivalent but less-expensive generics (Bronnenberg, Dubé, Gentzkow, and Shapiro 2015) even though information printed on the package reveals their equivalence. Investors pay a range of fees for investing in S&P 500 index funds—and index funds with higher fees have meaningful market shares (Hortaçsu and Syverson 2004). Consumers appear to demand the wrong cell phone plans given their previous usage patterns (Grubb and Osborne 2015).