Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210451 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 893
Publisher: 
Queen Mary University of London, School of Economics and Finance, London
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 also explores how the parameters affect the optimal default and the total loss in the population at the optimal default.
Subjects: 
optimal defaults
libertarian paternalism
nudging
pension plan design
JEL: 
D14
D91
J26
J32
Document Type: 
Working Paper

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