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Optimal pension plan default policies when employees are biased

Asen Ivanov ()

Journal of Public Economic Theory, 2021, vol. 23, issue 3, 583-596

Abstract: What is the optimal default contribution rate or default asset allocation in pension plans? Could active decision (i.e., not setting a default and forcing employees to make a decision) be optimal? These questions are studied in a model in which each employee is biased regarding her optimal contribution rate or asset allocation. In this model, active decision is never optimal and the optimal default is, depending on parameter values, one of three defaults. The paper explores how the parameters affect the average loss in the population at the optimal default.

Date: 2021
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https://doi.org/10.1111/jpet.12493

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Working Paper: Optimal Pension Plan Default Policies when Employees are Biased (2019) Downloads
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Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

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