The Zero Bias in Target Retirement Fund Choice
Abstract
Using a sample of individuals who hold target retirement funds (TRFs), we examine how people use arithmetic to estimate their retirement age. We find a robust “zero” bias where investors have a strong preference for TRFs that end with zero compared to TRFs that end with five. The evidence is consistent that the bias is an outcome of people using imprecise arithmetic, specifically rounding up and down in the computational estimation required to...
Paper Details
Title
The Zero Bias in Target Retirement Fund Choice
Published Date
Jul 3, 2020
Journal
Volume
47
Issue
4
Pages
500 - 522
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