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An Investigation into the Effects of Social Influences on the Paradox of Choice in Retirement Plans

Research in retirement planning has found that people are delaying investing in a retirement plan and are missing out on thousands of potential savings from not investing since 401(k)’s are protected against income taxes. This delay of investment could be occurring as a result of choice overload. The current study examined choice overload in the financial context of 401(k) retirement plans in order to find an efficient solution. Social influences and peer effects have been shown to increase retirement plan participation rates. Participants (n=119) were randomly assigned to a control condition or one of two social preferences conditions, one of which had a heavily skewed social preference while the other had relatively equal preferences. Participants were instructed to build a 401(k) and then were asked questions regarding their financial literacy and overload and satisfaction with their decisions. There was no significant effect of social preferences on overload or satisfaction. However, financial literacy was found to be a negative predictor of satisfaction.

Identiferoai:union.ndltd.org:CLAREMONT/oai:scholarship.claremont.edu:cmc_theses-2936
Date01 January 2018
CreatorsBaxter, Claire
PublisherScholarship @ Claremont
Source SetsClaremont Colleges
Detected LanguageEnglish
Typetext
Formatapplication/pdf
SourceCMC Senior Theses
Rights© 2018 Claire S Baxter, default

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