 Flicking the switch: Simplifying disclosure to improve retirement plan choicesSusan Thorp, H. Bateman, Loretti Dobrescu, B.R. Newell and Andreas Ortmann Journal of Banking & Finance, 2020, vol. 121, issue C Abstract: Standardized information disclosures aim to help people compare complex financial products and make better choices. We investigate the extent to which information shown in a regulator-mandated dashboard helps retirement savers choose between alternative pension plans. We conduct incentivized experiments that collect participants’ repeated choices between two pension plans using the mandatory dashboard, and subsequently test whether an even simpler dashboard improves choices, and by how much. Participants switch quickly from a high- to a low-fee pension plan when they see explicit nominal fees but are significantly more confused by percentage fees and adjust slower. When differences between plan performance arise from gross returns, not fees, we find that complex information formats can seriously hinder participants’ recognition and reactions. We present a Bayesian updating model which estimates the relative noisiness of the signals from fees and gross returns across different treatments and use this model to show how better information presentation raises retirement savings. Keywords: Information disclosure; Pensions; Choice experiment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:121:y:2020:i:c:s037842662030217x DOI: 10.1016/j.jbankfin.2020.105955 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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