Risk Management for the Future: Age, Risk, and Choice Architecture

28 Pages Posted: 9 Jul 2012

See all articles by Orly Lobel

Orly Lobel

University of San Diego School of Law

On Amir

University of California, San Diego (UCSD) - Rady School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: July 9, 2012


How can regulation in an era of personal responsibility aid people to make the optimal decisions about their future risks, savings, and retirement? This study aims to deepen our understanding of how different age groups process choices in relation to future risk and retirement planning in diverse decision-making environments. In a series of experiments, we examine how age and the life cycle interact with the decision-making environment concerning savings, retirement and well-being. Across multiple experiments we find that when cognitive resources are available older participants opt for more prudent and future oriented financial and retirement choices, but that this pattern does not hold in situations that do not allow the luxury of executive control override. Moreover, in some instances, we find an increased effect of resource depletion for older compared to younger participants. At a theoretical level our findings suggest that much of the difference in financial choices between older and younger decision makers rests in the ability of each age group to override their intuitive and automatic responses to such decisions. At the policy level, as the regulatory field is moving from command-and-control rules to the provision of menu options and choice architecture, our findings provide potential guidelines for better designing retirement and savings plans, such as the implementation of SMT-style programs and the encouragement of annuity over lump sum retirement benefits.

Keywords: risk, risk regulation, behavioral economics, future risk, pensions, savings, financial health, aging, cognitive depletion, retirement, experimental law and economics, intertemporal choice

JEL Classification: D91, D92, D81, E24, E21, H31, H55, J26, K31, M51, M52

Suggested Citation

Lobel, Orly and Amir, On, Risk Management for the Future: Age, Risk, and Choice Architecture (July 9, 2012). 7th Annual Conference on Empirical Legal Studies Paper, Available at SSRN: https://ssrn.com/abstract=2102541 or http://dx.doi.org/10.2139/ssrn.2102541

Orly Lobel (Contact Author)

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

HOME PAGE: http://home.sandiego.edu/%7Elobel/

On Amir

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States
858-534-2023 (Phone)
858-534-0745 (Fax)

HOME PAGE: http://management.ucsd.edu/faculty/directory/amir/

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