In response to this objection, we have recently become interested in the possibility of “one-click paternalism,” embodied in approaches that nudge people in good directions, but that allow essentially costless opt-outs. An example would be an automatic enrollment plan for savings, which workers could reject by a press of a button. Another example would be a default prescription drug plan for seniors, which people could replace with a plan that better suits their needs with a click (or possibly two).
If one-click paternalism provides a useful model, cooling-off periods are a bit more controversial, at least if you can’t one-click your way out of them. Thaler and I think that one-click paternalism is often a useful approach for private institutions (employers, rental car companies, cell phone providers) and that the market will produce at least some protection against self-interested or venal nudging.
For government, we think that a form of public nudging is inevitable (short of anarchy), and that in many domains, one-click paternalism is preferable to both the command-and-control regulation favored by many liberals and the laissez-faire approaches favored by many conservatives.
Note: This post was originally published on the University of Chicago Law School Faculty blog.