How Much is Investor Autonomy Worth?

Posted: 30 Dec 2003

See all articles by Shlomo Benartzi

Shlomo Benartzi

University of California at Los Angeles

Richard H. Thaler

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

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Abstract

There is a worldwide trend towards defined contribution savings plans, where investors are often able to select their own portfolios. How much is this freedom of choice worth? We present retirement investors with information about the distribution of outcomes they could expect to obtain from the portfolios they picked for themselves, and the same information for the median portfolio selected by their peers. A majority of our survey participants actually prefer the median portfolio to the one they picked for themselves. We investigate various explanations for these findings and offer some evidence that the results are partly attributable to the fact that investors do not have well-defined preferences.

Suggested Citation

Benartzi, Shlomo and Thaler, Richard H., How Much is Investor Autonomy Worth?. Journal of Finance, Vol. 57, pp. 1593-1616, 2002. Available at SSRN: https://ssrn.com/abstract=320671

Shlomo Benartzi (Contact Author)

University of California at Los Angeles ( email )

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Richard H. Thaler

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States
773-702-5208 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

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