Retirement savings investment choices: Sophisticated or naive?

Paul Gerrans and Ghialy Yap

Pacific-Basin Finance Journal, 2014, vol. 30, issue C, 233-250

Abstract: We assess investment sophistication in a large sample of auto-enrolled, retirement plan member choices. A strong preference for using a small number of investment options is provided with little evidence, overall, to support equally weighted allocations. However, when multiple options are selected, one-third are equally weighted allocations and this is more prevalent when an easily divisible number of options are used. Positive learning is suggested in patterns of choices with sophisticated choice more likely in later choices. Possible consequences of menu framing, specifically menu size, do not support influence on effective asset allocations.

Keywords: Investment choice; Naive diversification; Sophistication; Household finance; Retirement; Superannuation; Learning (search for similar items in EconPapers)
JEL-codes: D14 E21 G11 J26 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:30:y:2014:i:c:p:233-250

DOI: 10.1016/j.pacfin.2014.10.005

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