Heuristics and Biases in Retirement Savings Behavior

@article{Benartzi2007HeuristicsAB,
  title={Heuristics and Biases in Retirement Savings Behavior},
  author={Shlomo Benartzi and Richard H. Thaler},
  journal={RI: Retirement Decision-Making (Topic)},
  year={2007}
}
  • S. Benartzi, R. Thaler
  • Published 22 January 2007
  • Economics, Business
  • RI: Retirement Decision-Making (Topic)
Standard economic theories of saving implicitly assume that households have the cognitive ability to solve the relevant optimization problem and the willpower to execute the optimal plan. Both of the implicit assumptions are suspect. Even among economists, few spend much time calculating a personal optimal savings rate. Instead, most people cope by adopting simple heuristics, or rules of thumb. In this paper, we investigate both the heuristics and the biases that emerge in the area of… 
Investment Decisions for Retirement Savings
We conducted a choice experiment to investigate whether retirement savers follow simple portfolio theory when choosing investments. We modeled experimental survey data on 693 participants using a
Temptation and Retirement Accounts: A Story of Time Inconsistency and Bounded Rationality
Research shows that American workers tend to under-save for retirement. Some studies attribute the under-saving to a lack of self-control and time inconsistent saving plans, while others use the
Default and Naïve Diversification Heuristics in Annuity Choice
Retirement income stream products are difficult for consumers to choose because of their high perceived risk, irreversibility, high expenditure, little opportunity for social learning and distant
Implications of Behavioural Economics for Mandatory Individual Account Pension Systems
In individual account pension systems, members bear the risks and consequences of their investment decisions. If participants behave as predicted by economic theory, such responsibility would be
Retirement Saving Choices: Review of the Literature and Policy Implications
Pension reforms in many countries have resulted in more choice and risk to individuals, decreasing the dependability on State public pensions. However, it is not clear how research has addressed this
The nudging role of behavioral economics in retirement savings decisions: Current situation and future prospects
: Richard Thaler was awarded the 2017 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for his contributions to behavioral economics. Based on bounded rationality, procrastination,
An Experimental Survey of Investment Decisions for Retirement Savings
We implement a choice experiment to investigate the extent to which retirement savers follow standard mean-variance analysis when choosing from a menu of investment options. We conduct this survey
Behavioural finance theory: implications for retirement savings
This paper contains an overview of the life-cycle model and the behavioural finance theories that assist in explaining why individual savings behaviour deviates from what is predicted by this model.
Individual Differences in 401(k) Plan Allocation Choices
Insufficient retirement savings behavior practiced by a significant number of employees underscores the importance of understanding the characteristics of those individuals most likely to choose the
The Role of Behavioral Economics and Behavioral Decision Making in Americans' Retirement Savings Decisions
TLDR
How behavioral and psychological issues, such as self-control, emotions, and choice architecture can help policymakers understand what factors, aside from purely economic ones, may affect individuals' savings behavior are discussed.
...
...

References

SHOWING 1-10 OF 153 REFERENCES
Implications of Behavioural Economics for Mandatory Individual Account Pension Systems
In individual account pension systems, members bear the risks and consequences of their investment decisions. If participants behave as predicted by economic theory, such responsibility would be
Saving or Retirement on the Path of Least Resistance
Over the last 20 years, employers have increased dramatically their offering of 401(k) plans as a vehicle for retirement income support. As of year-end 2000, there were over 325,000 401(k) plans with
Myopic Loss Aversion and the Equity Premium Puzzle
The equity premium puzzle, first documented by Mehra and Prescott, refers to the empirical fact that stocks have greatly outperformed bonds over the last century. As Mehra and Prescott point out, it
Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance
We assess the impact on savings behavior of several different 401(k) plan features, including automatic enrollment, automatic cash distributions, employer matching provisions, eligibility
Company Stock, Market Rationality, and Legal Reform
Some eleven million 401(k) plan participants take a concentrated equity position in their retirement savings account, investing more than 20% of the balance in their employer's common stock. Yet
Risk Aversion Or Myopia? Choices in Repeated Gambles and Retirement Investments
We study how decision makers choose when faced with multiple plays of a gamble or investment. When evaluating multiple plays of a simple mixed gamble, a chance to win x or lose y, subjects show a
Winners and Losers: 401(K) Trading and Portfolio Performance
Few previous studies have explored how individuals manage their defined contribution (DC) pension plan assets, even though such plans constitute an increasingly important component of retirement
Attitudes, savings choices, level of knowledge and investment preferences of employees toward pensions and retirement planning: Survey evidence from Barbados
This study draws on data from an online survey of a cross-section of Barbadian employees who are members of either defined benefit or defined contribution schemes. The results were heavily consistent
The Effects of Time Frames on Personal Savings Estimates, Saving Behavior, and Financial Decision Making
We examine effects of time frame duration (a month vs. a year) and delay (next month vs. a specific month in the future) on personal savings estimates of individuals. Results reveal that savings
...
...