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Extraneous menu-effects influence financial decisions made by pension trustees

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  • Weiss-Cohen, Leonardo
  • Ayton, Peter
  • Clacher, Iain

Abstract

Pension scheme trustees are responsible for the investment decisions of future generations’ retirement assets. However, behavioural finance research has mostly focussed on retail investors. While trustees are relatively sophisticated investors, they are not immune from biases. Across three experiments, we tested 252 pension scheme trustees for the influence of extraneous manipulations to the menu of options on investment decisions. Trustees were influenced by changes to the menu item mix, context, and layout. Care should therefore be taken when preparing information presented to trustees, in order to reduce biases that can be detrimental to pension outcomes.

Suggested Citation

  • Weiss-Cohen, Leonardo & Ayton, Peter & Clacher, Iain, 2020. "Extraneous menu-effects influence financial decisions made by pension trustees," Economics Letters, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:ecolet:v:187:y:2020:i:c:s0165176519304513
    DOI: 10.1016/j.econlet.2019.108895
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    References listed on IDEAS

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    Cited by:

    1. Weiss-Cohen, Leonardo & Ayton, Peter & Clacher, Iain & Thoma, Volker, 2022. "Pension scheme trustees as surrogate decision makers," Finance Research Letters, Elsevier, vol. 44(C).

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    More about this item

    Keywords

    Pensions; Trustees; Menu-effects; Decision-making; Behavioural finance biases;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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