Choosing Outcomes Versus Choosing Products: Consumer-Focused Retirement Investment Advice
Daniel G. Goldstein
Microsoft Research New York City; London Business School
Eric J. Johnson
Columbia Business School - Marketing
William F. Sharpe
Stanford University - Graduate School of Business
Journal of Consumer Research, Vol. 35, pp. 440-456
Investing for retirement is one of the most consequential yet daunting decisions consumers face. We present a way to both aid and understand consumers as they construct preferences for retirement income. The method enables consumers to build desired probability distributions of wealth constrained by market forces and the amount invested. We collect desired wealth distributions from a sample of working adults, provide evidence of the technique's reliability and predictive validity, characterize individual- and cluster-level differences, and estimate parameters of risk aversion and loss aversion. We discuss how such an interactive method might help people construct more informed preferences.
Number of Pages in PDF File: 17Accepted Paper Series
Date posted: June 18, 2009
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