seems that minimum wage laws create a kind of entitlement effect that affects subjects’
preferences, because they are less willing to work for a given wage after the experience o a legal
minimum wage.
These findings suggest that laws have a much deeper impact on human behaviour than just
changing constraints and beliefs. They may also affect what is considered as normatively
legitimate, which may directly affect economic outcomes. In Falk, Fehr and Zehnder, the impact
of history on subjects’ reservation wages changes actual wages and employment in the
experiment. There are hysteresis effects not, as in the standard model, through e.g. fixed costs,
but instead through changes in preferences.
An anomaly that has attracted a great deal of attention is the effect of default options on
decisions. Default options appear to have very large consequences for choices that people make
over retirement savings, insurance plans, and organ donation. For instance, in Austria, consent to
being an organ donor is the default option, so that not consenting requires an active decision to
opt out. Here the effective consent rate is 99.98% (Johnson and Goldstein 2003). Just over the
border in Germany, consent to being an organ donor requires opting out of the default option,
and the proportion of individuals who are organ donors is 12%.
Several factors consistent with the standard economics view that individuals have fixed
preferences could contribute to this vast difference in consent rates: Filling out a form to opt out
may have a high disutility. The default option may suggest that the norm is to contribute and
individuals may value meeting others’ expectations, or they may implicitly reciprocate a favor if
they believe that most others will also be organ donors. Perhaps differences in education,
transplant infrastructure, or religion influence contributions. But another possible explanation,
outside the classical economics view, is that preferences for organ donation are constructed at the
time of decision. In that view, choosing the default option is favored because it avoids the cost of
making an active decision.
A test that can provide evidence for the constructed preference view is that individuals who
have not made up their mind, but not other individuals, can be nudged to contribute to the public
good by a manipulation that makes them think about it. In this symposium, Stutzer, Goette, and
Zehnder (2011) test this prediction in a field study of blood donations by the Swiss Red Cross in
Zurich. All potential donors are asked in a questionnaire to indicate YES or NO to the question
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