The Effect of Pension Plan Design on Experiences of Choice Overload
Contrary to the view that choice is always for the good of a person, recent research introduces the concept of choice overload, likely inhibiting peoples’ ability to take effective decisions. This study is to test the extent to which individuals suffer from choice overload in the context of pension plan settings, a sector recently turning it’s attention towards autonomous choice. In specific, considering the asset allocation decision, by manipulating assortment size as well as assortment type, this research aims to improve pension plan design. Results show that presenting an alignable assortment and keeping the number of offered options reasonably small provides the most effective solution. Ultimately, the purpose of these results is to improve people’s financial position for retirement, by assisting pension funds in their plan design and in turn reducing the impact of choice overload.
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