Decision Making in the Pension Fund Board Room: An Experiment with Dutch Pension Fund Trustees
CentER Discussion Paper Series No. 2010-18
39 Pages Posted: 4 Mar 2010
Date Written: February 25, 2010
We ask how pension fund trustees deal with the booms and busts that funds encounter, and to what extent the decisions of pension fund trustees are affected by behavioral biases. We examine these issues by using a vignette-method field experiment among Dutch pension fund trustees. We find that trustees display choices that accord with the phenomenon of loss aversion and that trustees allow their choices to be affected by the forces of social comparison: the reserve position of their fund compared to the position of other funds has a significant influence in choosing a pension fund policy mix.
Keywords: pension funds, finance, governance, behavioral economics
JEL Classification: D7, G23, G11
Suggested Citation: Suggested Citation