Abstract
This paper examines heterogeneity in the responsiveness to default options in a large state retirement plan, focusing on individuals’ decision-making approaches as well as their economic and demographic characteristics. Analyses of a survey of plan participants show that procrastination and the need for cognitive closure are important determinants of the likelihood of default. This paper also explores an important implication of defaulting—individuals who default are significantly more likely to subsequently express a desire to enroll in a different plan. The desire to change plans is also correlated with numerous economic and decision-making characteristics, including procrastination.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 477-495 |
| Number of pages | 19 |
| Journal | Journal of Financial Economics |
| Volume | 121 |
| Issue number | 3 |
| DOIs | |
| State | Published - Sep 1 2016 |
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Keywords
- Behavioral economics
- Decision making
- Default options
- Pensions
- Retirement
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management
Cite this
Decision-making approaches and the propensity to default : Evidence and implications. / Brown, Jeffrey R; Farrell, Anne M.; Weisbenner, Scott J.
In: Journal of Financial Economics, Vol. 121, No. 3, 01.09.2016, p. 477-495.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Decision-making approaches and the propensity to default
T2 - Evidence and implications
AU - Brown, Jeffrey R
AU - Farrell, Anne M.
AU - Weisbenner, Scott J
PY - 2016/9/1
Y1 - 2016/9/1
N2 - This paper examines heterogeneity in the responsiveness to default options in a large state retirement plan, focusing on individuals’ decision-making approaches as well as their economic and demographic characteristics. Analyses of a survey of plan participants show that procrastination and the need for cognitive closure are important determinants of the likelihood of default. This paper also explores an important implication of defaulting—individuals who default are significantly more likely to subsequently express a desire to enroll in a different plan. The desire to change plans is also correlated with numerous economic and decision-making characteristics, including procrastination.
AB - This paper examines heterogeneity in the responsiveness to default options in a large state retirement plan, focusing on individuals’ decision-making approaches as well as their economic and demographic characteristics. Analyses of a survey of plan participants show that procrastination and the need for cognitive closure are important determinants of the likelihood of default. This paper also explores an important implication of defaulting—individuals who default are significantly more likely to subsequently express a desire to enroll in a different plan. The desire to change plans is also correlated with numerous economic and decision-making characteristics, including procrastination.
KW - Behavioral economics
KW - Decision making
KW - Default options
KW - Pensions
KW - Retirement
UR - http://www.scopus.com/inward/record.url?scp=84973098747&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84973098747&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2016.05.010
DO - 10.1016/j.jfineco.2016.05.010
M3 - Article
AN - SCOPUS:84973098747
VL - 121
SP - 477
EP - 495
JO - Journal of Financial Economics
JF - Journal of Financial Economics
SN - 0304-405X
IS - 3
ER -