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Comments on: Unwanted pregnancy and default options http://www.tvhe.co.nz/2008/04/16/unwanted-pregnancy-and-default-options/ The Visible Hand in Economics Mon, 08 Mar 2021 06:20:07 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: rauparaha http://www.tvhe.co.nz/2008/04/16/unwanted-pregnancy-and-default-options/#comment-1244 Wed, 16 Apr 2008 23:55:17 +0000 http://tvhe.wordpress.com/?p=332#comment-1244 Hmmm, interesting: is it unethical to re-frame a decision in such a way that peoples’ ‘irrationality’ causes them to choose a pareto inferior option?

I think any argument about framing being about transaction costs flies in the face of a significant body of empirical research so I can see why you’d avoid that one 🙂

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/04/16/unwanted-pregnancy-and-default-options/#comment-1243 Wed, 16 Apr 2008 23:42:12 +0000 http://tvhe.wordpress.com/?p=332#comment-1243 “so it can’t be said that the pill prevents people from utility maximising”

Definitely, I 100% agree with that. Which is why the existence of strategic complements is so important – as the utility maximising choice does not necessarily lead to the highest level of utility (given the strategic element).

If that did not exist then there would be no problem, because as you say it is a framing issue (unless we argued that the reference dependence was a result of significant transaction costs instead of cognitive bias – which I’m not going to do).

]]> By: rauparaha http://www.tvhe.co.nz/2008/04/16/unwanted-pregnancy-and-default-options/#comment-1242 Wed, 16 Apr 2008 23:18:25 +0000 http://tvhe.wordpress.com/?p=332#comment-1242 I think they are likely to be strategic complements as you say. However, the cost to people of havig less sex would have to be weighed against the benefits of reduced HIV transmission. Note also that we’re not changing the choice set, only re-framing the decision, so it can’t be said that the pill prevents people from utility maximising.

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/04/16/unwanted-pregnancy-and-default-options/#comment-1241 Wed, 16 Apr 2008 20:15:27 +0000 http://tvhe.wordpress.com/?p=332#comment-1241 Good post.

I agree with you on the unwanted pregnancy front.

However, on the libido front I would also like to add that the benefit to society would have to exceed any loss that occurs from a the strategic complementarity between sexual partners. After all, if introducing the pill for libido creates a game where consuming the pill and having sex are strategic complements between people, then in free market interaction we are going to have a sub-optimal amount of sex. In the case without the stuff in the water we are effectively enforcing compulsory taking of the pill – which may solve this issue.

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