Chapter

How Much Choice is Too Much? Contributions to 401(k) Retirement Plans

Sheena Sethi-Iyengar, Gur Huberman and Gur Jiang

in Pension Design and Structure

Published in print July 2004 | ISBN: 9780199273393
Published online January 2005 | e-ISBN: 9780191601675 | DOI: http://dx.doi.org/10.1093/0199273391.003.0005
How Much Choice is Too Much? Contributions to 401(k) Retirement Plans

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The wide range of 401(k) plans offered to employees has raised the question of whether there is such as thing as too much choice. The 401(k) participation rates among clients of the Vanguard Group were studied to verify the assumption that more choice is more desirable and intrinsically motivating. It was found that 401(k) plans that offered more funds had lower probability of employee participation.

Keywords: 401(k) retirement plans; plan contributions; pension plans; choice; investment; motivation

Chapter.  4770 words.  Illustrated.

Subjects: Financial Markets

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