See the question and my original answer on StackOverflow

The fact Serializable is the default comes from times when .NET wasn't even released (before year 1999), from DTC (Distributed Transaction Coordinator) programming.

DTC uses a native ISOLATIONLEVEL enumeration:

ISOLATIONLEVEL_SERIALIZABLE Data read by a current transaction cannot be changed by another transaction until the current transaction finishes. No new data can be inserted that would affect the current transaction. This is the safest isolation level and is the default, but allows the lowest level of concurrency.

.NET TransactionScope is built on top of these technologies.

Now, the next question is: why DTC defines ISOLATIONLEVEL_SERIALIZABLE as the default transaction level? I suppose it's because DTC was designed around year 1995 (before 1999 for sure). At that time, the SQL Standard was SQL-92 (or SQL2).

And here is what SQL-92 says about transaction levels:

An SQL-transaction has an isolation level that is READ UNCOMMITTED, READ COMMITTED, REPEATABLE READ, or SERIALIZABLE. The isolation level of an SQL-transaction defines the degree to which the operations on SQL-data or schemas in that SQL-transaction are affected by the effects of and can affect operations on SQL-data or schemas in concurrent SQL-transactions. The isolation level of a SQL- transaction is SERIALIZABLE by default. The level can be explicitly set by the <set transaction statement>.

The execution of concurrent SQL-transactions at isolation level SERIALIZABLE is guaranteed to be serializable. A serializable execution is defined to be an execution of the operations of concurrently executing SQL-transactions that produces the same effect as some serial execution of those same SQL-transactions. A serial execution is one in which each SQL-transaction executes to completion before the next SQL-transaction begins.