Naive Diversification Strategies in Defined Contribution Saving Plans

By Shlomo Benartzi, Richard H. Thaler. 2001

1,426 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/77031ad75db319fde889b6ff9269c0afdd81a9b8

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

In Finance

Citations in the corpus

Choosing Outcomes versus Choosing Products: Consumer‐Focused Retirement Investment Advice (2008, neutral): “…and Bloom 2000), they are commonly used in financial prospectuses and studies of financial risk perception (Siebenmorgen, Weber, and Weber 2000), and, finally, unlike asset allocation tasks, they preclude application of the 1/N heuristic (Benartzi and Thaler 2001), which can bias responses.”
Heuristics and Biases in Retirement Savings Behavior (2007, methodology): “In our sample, plans that do not have access to company stock have half in stock funds and half in bond funds, whereas plans with access to company stock have 42 percent in company stock and the remaining 58 percent split evenly between stock funds and bond funds (Benartzi and Thaler, 2001).”
Defined Contribution Pensions: Plan Rules, Participant Choices, and the Path of Least Resistance (2002, neutral): “Benartzi and Thaler (2001a) study the relationship between the menu of investment choices and the eventual pattern of asset holdings across different classes.”
Risk-return preferences in the pension domain: are people able to choose? (2007, neutral): “However, individuals may not benefit from autonomy because of a lack of financial sophistication (Lusardi and Mitchell, 2005), self-control problems, and psychological biases (Benartzi and Thaler, 2002; Thaler and Benartzi, 2004). Many DC pension funds in the US do in fact express doubts about the q”
Asking for Help: Survey and Experimental Evidence on Financial Advice and Behavior Change (2010, background): “Instead, they tend to use heuristics or simple decision rules to make their initial allocation decisions (Benartzi and Thaler, 2001; Agnew et al., 2005; Hewitt Associates, 2004; Investment Company Institute, 2001; Samuelson and Zeckhauser, 1988).”
Offering versus Choice in 401(k) Plans: Equity Exposure and Number of Funds (2006, methodology): “(This choice follows the practice in Benartzi and Thaler (2001).”
Decision by sampling. (2006, background): “Dougherty, Gettys, and Ogden (1999) decision making model MINERVA-DM (based on Hintzman’s, 1984, 1988; memory model) gives a mechanism by which the support for hypotheses depends on the similarity to traces stored in memory, providing an account of many heuristics and biases (see also Juslin & Perss”
Employer matching and 401(k) saving: Evidence from the health and retirement study (2007, background): “…schedule or caps on the 1 This includes work on automatic enrollment (Madrian and Shea, 2000, Choi, Laibson, Madrian, and Metrick, 2001, 2002), investment in company stock (Poterba, 2003), portfolio choice and trading in 401(k) plans (Benartzi and Thaler, 2001; Agnew, Balduzzi, and Sunden, 2003).”
Financial valuation of guaranteed minimum withdrawal benefits (2006, background): “For example, Benartzi and Thaler (2001) document that investors in 401(k) pension plans use simple 1/n heuristics to select mutual funds as opposed to using a mean-variance approach to diversify their portfolio.”
Fast and frugal forecasting (2009, methodology): “This simple rule is called the 1/N heuristic, and in recent times it has been described as a naı̈ve strategy used by lay investors (Benartzi & Thaler, 2001).”