It is paramount that retirement income systems and the advisers, trustees and other fiduciaries responsible for their management strike a fine balance between individual freedom and subtle nudges or paternalistic interventions.
Decision makers often face powerful incentives to increase risk-taking on behalf of others either through bonus contracts or competitive relative performance contracts. Motivated by examples from the recent financial crisis, we conduct an experimental study of risk-taking on behalf of others using a large sample with subjects from all walks of life. We find that people respond to such incentives without much apparent concern for stakeholders. Responses are heterogeneous and mitigated by personality traits. The findings suggest that lack of concern for others’ risk exposure hardly requires “financial psychopaths” in order to flourish, but is diminished by social concerns. We believe the research reported here is the first to experimentally investigate the effects of incentives on risk-taking on behalf of others, and to do so on a large scale using a random sample of the general population.
By Ola Andersson, Håkan J. Holm, Jean-Robert Tyran and Erik Wengström
To read more research articles, please visit https://www.hhs.se/site
Decision makers often face powerful incentives to increase risk-taking on behalf of others either through bonus contracts or competitive relative performance contracts. Motivated by examples from the recent financial crisis, we conduct an experimental study of risk-taking on behalf of others using a large sample with subjects from all walks of life. We find that people respond to such incentives without much apparent concern for stakeholders. Responses are heterogeneous and mitigated by personality traits. The findings suggest that lack of concern for others’ risk exposure hardly requires “financial psychopaths” in order to flourish, but is diminished by social concerns. We believe the research reported here is the first to experimentally investigate the effects of incentives on risk-taking on behalf of others, and to do so on a large scale using a random sample of the general population.
By Ola Andersson, Håkan J. Holm, Jean-Robert Tyran and Erik Wengström
To read more research articles, please visit https://www.hhs.se/site
This presentation offers insight on systems approach in order to illustrate the complexities of the social determinants of health; and its effectiveness in identifying, assessing and developing effective policy alternatives to advance health equity.
Aziza Mahamoud, Research Associate, Systems Science and Population Health
Michael Shapcott, Director of Housing and Innovation
www.wellesleyinstitute.com
Follow us on twitter @wellesleyWI
Cheryl Currie: Refocusing our Efforts to Promote Responsible Gambling: The Im...Horizons RG
Cheryl Currie: Refocusing our Efforts to Promote Responsible Gambling: The Importance of a Public Health Lens
Session 4B
Presented at the New Horizons in Responsible Gambling Conference in Vancouver, January 27-29, 2014
Decision-making is an fundamental part of modern management. Every manager or leader takes hundreds and hundreds of decisions subconsciously or consciously making it as the key component in the role of a leader or manager.
Developing Emotional Intelligence for Healthcare LeadersYasmin AbdelAziz
Skills in emotional intelligence (EI) help healthcare leaders understand, engage and
motivate their team. They are essential for dealing well with conflict and creating workable
solutions to complex problems.
While taking a programmatic approach to creating mental health in an organization is imperative, it cannot be done without addressing the root causes. Building trust and creating an environment where employees feel cared about takes time, energy and effort. Too often, leaders want to skim over the relational parts of leadership and fail to develop productive social infrastructure within their workplace. As trust and emotional security form the basis for employee engagement, cooperative behaviour, commitment, and loyalty, it is imperative to understand what employees need to feel psychologically secure and to emerge from their behavior that is driven by fear and anxiety.
ACT implementation may include a variety of
community stakeholders as well as both local and state
health authorities. If an organization is providing
effective ACT services, many systems which interface
with ACT clients (e.g., behavioral healthcare, primary
healthcare, criminal justice) have an investment in the
outcomes generated by ACT, because clients will not
be showing up in those systems as frequently. Courts,
hospitals, managed-care companies, and the local
mental health authority all interact with the
individuals you are serving. Therefore, it is important
to engage these key stakeholders in the
implementation process.
Dr. Michael Wohl - Advances in Motivating Change Among Disordered Gamblers: W...Horizons RG
Dr. Michael Wohl - Advances in Motivating Change Among Disordered Gamblers: Why and How Memories of the Past Self Can Facilitate Motivation to Engage in Behavioural Change
Presented at the New Horizons in Responsible Gambling Conference in Vancouver, February 2-4, 2015
“Impact of Behavioral Biases on Investors Decision Making: Male Vs Female”IOSR Journals
This study aims to investigate the influence of behavioral biases on investment decisions made by students and employees. This objective was achieved by administering a questionnaire and collecting empirical data from graduate & post graduate students and employees about their own perceptions of biases. Questionnaire was distributed among the sample of hundred students/employees from which 45% were students and 55% were employees. Two statistical techniques were used to analyze collected data. Correlation was used to analyze the relationship of overconfidence bias with illusion of control bias, familiarity bias, loss aversion bias and confirmation bias. Chi-square was used to determine the significant difference between the responses of male and female about overconfidence bias. Results of this study reports weak negative correlation between overconfidence bias and other behavioral bias discussed in the study. This study concludes there is no significant difference between the responses of male and female decision making regarding overconfidence bias.
Climate change has become a hot-button issue in mainstream American politics, and people are divided over its causes, impacts, and solutions. This presentation will offer an overview of how the public views the issue of climate change, several explanations for these differences in perception, and possible approaches for bridging the gaps through innovative communication strategies. I will also present some initial findings from a NSF funded project aimed at communicating about climate change and its long-term association with the issue of agricultural runoff in the Maumee Watershed area of Ohio.
http://www.extension.org/pages/68139/communicating-about-climate-change
The Art of Decision-Making: Navigating Complexity and Uncertaintycapivisgroup
Decision-making is both an art and a science. Whether you’re a business leader, a student, or an individual facing life choices, the ability to make informed decisions is crucial and management consulting charlotte NC companies will provide necessary needed data to make any decision related to the business. In this article, we explore the intricacies of decision-making, drawing insights from psychology, economics, and real-world scenarios. Let’s dive into the art of making choices that shape our lives and organizations.
“Intuition as a factor of investment choice of female faculty members”Dr. Gargi Pant Shukla
Executive Summary:
Retirement planning is an integral and the most important part of financial planning for any individual. Every individual looks for¬ward to spend¬ing the post retire¬ment years in the lap of luxury. In the recent years the requirement of financial planner is so high and the financial planners have been available to help the clients to develop retirement plans. Only 10% of the population in India goes for the retirement planning or some social security. In this paper researchers have studied towards retirement planning and the investment behavior of female faculty members towards retirement planning avenues. A person needs to take challenging investment decisions in order to optimally plan for retirement. These decisions as per finance theories have been motivated by reasoning while unfortunately the intuition aspect has been portrayed in a negative manner by behavioural finance advocates. The research is an attempt to study the investment behaviour of female faculty member towards retirement planning avenue. In this paper researchers have found that the female faculty members’ investment in various retirement planning avenues is heavily influenced by intuition thus supporting HDMM (HOLISTIC DECISION MAKING MODEL).
What are the Principles and Drawbacks of Behavioral Economics.pdfAssignment Help
Behavioral economics, which is the field that lies at the intersection of psychology and economics, is of great value for economics students. It holds practical importance and involves different disciplines applications, and research opportunities. It is a tool that the policymakers use while they are decision-makers; it is a multidisciplinary approach. Behavioral economics also helps the stakeholders assess the policy while it plays a role in advancing research. However, economics students find assignments on this topic challenging for several reasons. It presupposes to mix of economics and psychology, calling for students to conduct investigations of both science and psychology. Being a complex topic it is tough for students to do assignments. Economics assignment help services provide accurate time management and quality assurance assistance to students with assignments for this study topic.
This presentation offers insight on systems approach in order to illustrate the complexities of the social determinants of health; and its effectiveness in identifying, assessing and developing effective policy alternatives to advance health equity.
Aziza Mahamoud, Research Associate, Systems Science and Population Health
Michael Shapcott, Director of Housing and Innovation
www.wellesleyinstitute.com
Follow us on twitter @wellesleyWI
Cheryl Currie: Refocusing our Efforts to Promote Responsible Gambling: The Im...Horizons RG
Cheryl Currie: Refocusing our Efforts to Promote Responsible Gambling: The Importance of a Public Health Lens
Session 4B
Presented at the New Horizons in Responsible Gambling Conference in Vancouver, January 27-29, 2014
Decision-making is an fundamental part of modern management. Every manager or leader takes hundreds and hundreds of decisions subconsciously or consciously making it as the key component in the role of a leader or manager.
Developing Emotional Intelligence for Healthcare LeadersYasmin AbdelAziz
Skills in emotional intelligence (EI) help healthcare leaders understand, engage and
motivate their team. They are essential for dealing well with conflict and creating workable
solutions to complex problems.
While taking a programmatic approach to creating mental health in an organization is imperative, it cannot be done without addressing the root causes. Building trust and creating an environment where employees feel cared about takes time, energy and effort. Too often, leaders want to skim over the relational parts of leadership and fail to develop productive social infrastructure within their workplace. As trust and emotional security form the basis for employee engagement, cooperative behaviour, commitment, and loyalty, it is imperative to understand what employees need to feel psychologically secure and to emerge from their behavior that is driven by fear and anxiety.
ACT implementation may include a variety of
community stakeholders as well as both local and state
health authorities. If an organization is providing
effective ACT services, many systems which interface
with ACT clients (e.g., behavioral healthcare, primary
healthcare, criminal justice) have an investment in the
outcomes generated by ACT, because clients will not
be showing up in those systems as frequently. Courts,
hospitals, managed-care companies, and the local
mental health authority all interact with the
individuals you are serving. Therefore, it is important
to engage these key stakeholders in the
implementation process.
Dr. Michael Wohl - Advances in Motivating Change Among Disordered Gamblers: W...Horizons RG
Dr. Michael Wohl - Advances in Motivating Change Among Disordered Gamblers: Why and How Memories of the Past Self Can Facilitate Motivation to Engage in Behavioural Change
Presented at the New Horizons in Responsible Gambling Conference in Vancouver, February 2-4, 2015
“Impact of Behavioral Biases on Investors Decision Making: Male Vs Female”IOSR Journals
This study aims to investigate the influence of behavioral biases on investment decisions made by students and employees. This objective was achieved by administering a questionnaire and collecting empirical data from graduate & post graduate students and employees about their own perceptions of biases. Questionnaire was distributed among the sample of hundred students/employees from which 45% were students and 55% were employees. Two statistical techniques were used to analyze collected data. Correlation was used to analyze the relationship of overconfidence bias with illusion of control bias, familiarity bias, loss aversion bias and confirmation bias. Chi-square was used to determine the significant difference between the responses of male and female about overconfidence bias. Results of this study reports weak negative correlation between overconfidence bias and other behavioral bias discussed in the study. This study concludes there is no significant difference between the responses of male and female decision making regarding overconfidence bias.
Climate change has become a hot-button issue in mainstream American politics, and people are divided over its causes, impacts, and solutions. This presentation will offer an overview of how the public views the issue of climate change, several explanations for these differences in perception, and possible approaches for bridging the gaps through innovative communication strategies. I will also present some initial findings from a NSF funded project aimed at communicating about climate change and its long-term association with the issue of agricultural runoff in the Maumee Watershed area of Ohio.
http://www.extension.org/pages/68139/communicating-about-climate-change
The Art of Decision-Making: Navigating Complexity and Uncertaintycapivisgroup
Decision-making is both an art and a science. Whether you’re a business leader, a student, or an individual facing life choices, the ability to make informed decisions is crucial and management consulting charlotte NC companies will provide necessary needed data to make any decision related to the business. In this article, we explore the intricacies of decision-making, drawing insights from psychology, economics, and real-world scenarios. Let’s dive into the art of making choices that shape our lives and organizations.
“Intuition as a factor of investment choice of female faculty members”Dr. Gargi Pant Shukla
Executive Summary:
Retirement planning is an integral and the most important part of financial planning for any individual. Every individual looks for¬ward to spend¬ing the post retire¬ment years in the lap of luxury. In the recent years the requirement of financial planner is so high and the financial planners have been available to help the clients to develop retirement plans. Only 10% of the population in India goes for the retirement planning or some social security. In this paper researchers have studied towards retirement planning and the investment behavior of female faculty members towards retirement planning avenues. A person needs to take challenging investment decisions in order to optimally plan for retirement. These decisions as per finance theories have been motivated by reasoning while unfortunately the intuition aspect has been portrayed in a negative manner by behavioural finance advocates. The research is an attempt to study the investment behaviour of female faculty member towards retirement planning avenue. In this paper researchers have found that the female faculty members’ investment in various retirement planning avenues is heavily influenced by intuition thus supporting HDMM (HOLISTIC DECISION MAKING MODEL).
What are the Principles and Drawbacks of Behavioral Economics.pdfAssignment Help
Behavioral economics, which is the field that lies at the intersection of psychology and economics, is of great value for economics students. It holds practical importance and involves different disciplines applications, and research opportunities. It is a tool that the policymakers use while they are decision-makers; it is a multidisciplinary approach. Behavioral economics also helps the stakeholders assess the policy while it plays a role in advancing research. However, economics students find assignments on this topic challenging for several reasons. It presupposes to mix of economics and psychology, calling for students to conduct investigations of both science and psychology. Being a complex topic it is tough for students to do assignments. Economics assignment help services provide accurate time management and quality assurance assistance to students with assignments for this study topic.
Running Head FINANCIAL LITERACY1FINANCIAL LITERACY10.docxwlynn1
Running Head: FINANCIAL LITERACY 1
FINANCIAL LITERACY 10
Financial Literacy
Professor’s Name
Student’s Name
Course Title
Date
Financial Literacy
Introduction
Any average investor of American origin usually makes financial decisions, specifically when it comes to retirement and saving. Some of the costly errors include the failure in making sure that there is receipt of the employer matching contribution towards your saving, inadequate saving, the payment of excess interest costs and excessive fees and the substandard diversification (Deuflhard et al., 2019). The evident prepondence portrays a picture of the general inadequacy of understanding for return, risk and diversification in the stock markets.
The financial literacy is the capability of understanding and correctly applying the financial management skills (Deuflhard et al., 2019). The act of managing debts properly, calculating interests properly, effective planning for finances as well as understanding the time value of money is what financial literacy entails.
The resulting poor financial behaviours and the financial knowledge low levels with the effect being seen in the troubled context of the pension’s disappearance and the improved personal responsibility in terms of the retirement plans well seen in the defined patterns of contribution plans is a good proof that financial literacy is becoming a common phenomenon. In the modern finance, there is a component of punishing financial ignorance and rewarding of the do it yourself component of necessitated by financial knowledge. The lack of regulation of the financial markets and the comparatively easy access to credit has increased further the appetite for financial knowledge (Calcagno et al., 2019). Most individuals are now responsible for making their own investment choices and could end erring in security selection and the asset allocation or even both.
Financial Literacy background information
Financial literacy refers to the ability to effectively and efficiently manage and evaluate your finances so that you make prudent decision geared towards attaining your life goals and achieve the financial well-being (Calcagno et al., 2019). When you are financially literate, you will protect yourself from being exploited either through questionable investments or identity fraud and this allows you to meet the everyday or basic needs.
How financial literacy affects your daily life
There are five basic components or areas in personal finance that people need to acquint themselves for them to become financially stable (Deuflhard et al., 2019). Capturing and making these areas part of your life is important in many aspects of our day to day life and that include;
Income and money
Education, career choices and job skills all affect our finances and income. There has always been a trade-off between effort and time, rewards and money. Time will always be in tandem with money. When you working for a living which many of us.
Paper “is investment with intuition keeping the portfolio inflation safe” paperDr. Gargi Pant Shukla
Executive Summary:
Retirement planning is an emerging concept for the Indian women. There are only few women who are fortunate enough to receive a stable income after retirement. The main mantra to make the retirement more comfortable is to start saving early for retirement. The present study is an attempt to study the financial portfolio of female respondents and analyze if their retirement plans are sufficient against the change in inflation rate and correspondingly suggest them the amount which will be sufficient for their post retirement income against the rise in cost of living. Analysis has been done with the help of the portfolios developed on the basis of current and prospectus savings and expenses. Female faculty members of different designation and income groups are considered for analysis. The pattern of their investment is analyzed at different inflation rate varying from 6% to 12%. The results show that those faculty members’ who are investing on the basis of their intuition are guarding their portfolio better against inflation than those who are investing on the basis of other factors.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
How to convince your boss to use insights and strategies from Behavioral Econ...beworks
Behavioral Economics has revolutionized our understanding of decision making.
We now know that humans are far from perfectly rational. Instead, there are psychological biases that strongly influence people’s choices.
The result is a more accurate prediction of human behavior, which can facilitate desirable business outcomes.
Once you understand the drivers of behavior, you can change behavior.
Yet another busy month with five major superannuation reforms introduced to Parliament. The Bills relate to promoting Member Outcomes, Housing Affordability, Independent Directors on Trustee Boards, Complaints or Dispute Resolution, and extending Choice of Fund.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...Amil Baba Dawood bangali
Contact with Dawood Bhai Just call on +92322-6382012 and we'll help you. We'll solve all your problems within 12 to 24 hours and with 101% guarantee and with astrology systematic. If you want to take any personal or professional advice then also you can call us on +92322-6382012 , ONLINE LOVE PROBLEM & Other all types of Daily Life Problem's.Then CALL or WHATSAPP us on +92322-6382012 and Get all these problems solutions here by Amil Baba DAWOOD BANGALI
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how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Think again: behavioural finance and retirement incomes
1. 1
FS Advice THE AUSTRALIAN JOURNAL OF FINANCIAL PLANNING•
Retirementwww.fsadvice.com.au
April | 2017
THINK AGAIN
Behavioural Finance Retirement Incomes
Jonathan Steffanoni
Behavioural Finance Retirement Incomes
It is paramount that retirement income systems and the advisers,
trustees and other fiduciaries responsible for their management
strike a fine balance between individual freedom and subtle nudges
or paternalistic interventions. While a life cycle savings economic
model provides a sound foundation, there is a need to consider the
key decision points from a behavioural perspective if outcomes are to
be best directed towards promoting an adequate and dignified retire-
ment for ageing populations.
In the early 1950s, Nobel prize winning economist Franco Mod-
igliani and student, Richard Brumberg theorised the Life Cycle
hypothesis, suggesting that individuals make spending and saving
decisions based on the resources available to them over their lifetime
and on their current stage of life. Modigliani asserted that individuals
made rational spending and saving decisions to build up assets at the
throughout the middle stages of their working lives, before drawing
down on these in retirement. It is a model of lifetime self-sufficiency
and responsibility with roots in neo-classical economic theory which
is rational, reasonable and removed from reality.
Few would disagree with the notion that it makes good economic
sense to save for retirement — yet a cursory observation of the world
will confirm that there are an awful lot of people whose decision-
making behaviour is inconsistent with their rational views. Scarcity
of income for saving, and legitimate expectations of dependence on
state funded or occupational age pensions or family support in retire-
ment are important factors in shaping decision making. However,
there are also more fundamental behavioural biases which skew deci-
sion making when it comes to retirement income planning. It is im-
portant that there is an awareness of these biases not only in individu-
als, but also in the design of retirement income systems, products and
services, and those trusted to manage them which are increasingly
responsible for providing retirement income.
Dividing decision making
The fact that individuals often fail to make decisions to smooth their
spending and consumption over their lives in saving for a self-sufficient
retirement has long been known. Paternalistic systems have developed
to accommodate this, relying on family structures, governments, em-
ployers and fiduciaries such as trustees and advisors making various
retirement income focused decisions on behalf of individuals.
Jonathan Steffanoni, QMV
Jonathan Steffanoni is a lawyer, principal consultant - legal and risk at QMV and a Fellow of ASFA. He advises and
consults on a broad range of projects with Australia's most prominent superannuation funds. Jonathan has completed
a Juris Doctor, Diploma in Financial Services, and Graduate Diploma in Legal Practice. He also holds undergraduate
degrees in Business and Arts.
Figure 1.
Figure 2.
2. This division of decision making responsibilities between indi-
viduals, fiduciaries and governments has typically been reflected in
the three-pillar model which remains common across much of the
world. Governments rely on public policies using taxation powers
to finance age pensions, fiduciaries are responsible for the manage-
ment of occupational pensions and individuals remain responsible
for private savings.
While such a characterisation is neat, it is more nuanced and the
subject of continued change. The role of individual decision making
in the management of occupational pensions is playing an increas-
ingly important role, particularly in Northern America and Australia
where individual control over investment and other decisions is on
the ascent.
Irrespective of the distribution of decision making powers, it
is important that decision making is prudent and responsible in
ensuring that retirement incomes are adequate, manage risk ap-
propriately and costs are efficient. Neo-classical economic theory
provides rational models such as that proposed by Modigliani to
inform what such decision making might look like, yet recent ad-
vances in behavioural science have shone a light on why individual
decision making is often far removed from the rational agent model
in practice.
Behavioural Finance
The human mind is wonderfully complex, and this article has no
intention of attempting to reproduce the insights which behav-
ioural scientists have illuminated workings of the human mind.
However, it is worth briefly touching on some basic characteristics
of the human mind which have profoundly unsettling yet familiar
implications for rational agent economic models of decision mak-
ing behaviour.
Our mind is of limited capacity, and has developed wonder-
ful ways of efficiently processing information to make decisions.
The associative, intuitive and heuristic adaptability of our minds
enables us to avoid paralysis from information overload that a
strictly considered and logical approach would entrench. Yet,
the brilliant efficiency of the associative, intuitive and heuristic
mind has a downside.
Behavioural biases can creep into decisions which would result in
better outcomes if they followed a strictly considered and logical ap-
proach. There are a broad range of biases which have been scien-
tifically proven, and we’ll only consider a few which are relevant for
retirement income decision making:
The popular publications of Nudge from Richard Thaler and Cass
Sunstein in 2008 and Thinking, Fast and Slow in 2011 by Daniel
Kahneman (the first psychologist to win the Nobel prize in eco-
nomics) have helped to popularise Behavioural Economics. Behav-
ioural finance extends from the same behavioural science founda-
tion, connecting traditional models based on neo-classical economic
theory with the findings of psychologists in behavioural science.
If understood and applied effectively, behavioural finance can
assist in promoting better decision making to ensure that the un-
derlying objectives of the rational agent model such as Modigliani’s
are met.
There are also challenges in balancing behavioural finance with
the neoclassical model, in ensuring that decision making can ac-
commodate psychological realism without collapsing into a mess
of special cases. To achieve this balance in the context of retire-
ment planning it can be useful to characterise the key aspects of
the rational agent retirement planning and look at how behaviour-
al biases might interfere and importantly how these biases might
be managed.
Retirement planning decision making
Governments, fiduciaries and individuals make decisions about re-
tirement income. The distribution of decision making responsibil-
ity differs between nations, yet there are a series of central themes
which when combined can be said to represent retirement income
decision making.
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Figure 3.
Figure 4.
Figure 5.
Figure 6.
Disposition
Effect
Illusion of
Control
Mere
Exposure
Effect
Dunning-Kruger
Effect
Optimism
Bias
Peltzman
Effect
Attention
bias
Framing Bias
Status Quo
Zero Risk
Bias
IKEA Effect
Gambler's
Fallacy
Normalcy
Bias
Hyperbolic
Discounting
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In making decisions in these key areas, there are a broad range of
behavioural themes which might afflict rational decisions. Themes of
consistency, over-confidence, anchoring, social herding, loss aversion,
framing and emotion are caused by underlying behavioural biases
which in turn tend to skew rational decision making by both individu-
als and agents such as fiduciaries or advisors.
If we were to consider the expected decision making of a rational
individual in these key areas, we could expect the decisions to cor-
relate somewhat to those in the chart below:
However if we were to look at how the decisions might be formed in
the case where an individual exhibited some behavioural biases, then
it might look something like this:
The remainder of this article is directed towards understanding
how these biases might impact of the key retirement income decisions
made by individuals and fiduciaries, with the hope of promoting the
development of approaches to improve retirement income system de-
sign and decision making by individuals and fiduciaries.
Engagement control
The level of control that individuals have over their retirement sav-
ings is a decision which is becoming increasingly important. It is es-
sentially a decision (or non-decision) about how much of the decision
making responsibility the individual wishes to assume. This is par-
ticularly prominent in the occupational pension and private savings
pillars, with the availability of products and services with various
levels of control and flexibility.
These decisions which go to the level of control an individual has
over their retirement income making generally relates to the balance
between an individual and a fiduciary such as a trustee or an adviser.
There is no correct level of control, rather decision makers should
make decisions based on aligning the level of control with the level of
engagement of the decision maker.
In making decisions about the level of control which the decision
maker intends to exert, there lies a challenge in ensuring that be-
havioural biases don’t afflict the decision maker to choose a level of
control which is not aligned with the level of engagement. Research
in behavioural science has identified traits which are common in in-
dividuals and may contribute to decisions which misalign the level
of control over a fund or product and the level of engagement of the
decision maker.
The Dunning-Kruger Effect is the tendency for unskilled individ-
uals to overestimate their own ability, while experts underestimate
their own ability. When making decisions about the level of control
over retirement income planning, there may then be a bias towards
individuals choosing products which provide a large amount of flex-
ibility and control to the individual, when the individual does not
have the required skills to effectively make prudent decisions about
their retirement income planning. This may also explain the allure of
product which provide a high degree of control and flexibility. While
a high level of control may be appropriate for many individuals, there
is certain to be large segments of the population who do not have the
interest or aptitude to involve themselves in the complexities often
involved in diligent retirement income planning.
The IKEA effect is the tendency for individuals to place a dispro-
portionately high value of objects that they have contributed to the
construction of, regardless of the quality of the outcome or result. In
the context of decisions over the level of control that an individual
has over their retirement income decisions, there is a risk that such
tendencies may see individuals who have chosen to exercise a greater
level of control over their retirement planning being unable to objec-
tively assess the performance and hence value relative to alternate
options. This may result in individuals remaining in self-managed
accounts or similar occupational pension products longer than they
objectively and rationally should.
This overconfidence and disproportionate valuation of adopting a
high level of control over managing retirement income savings is of-
ten irrational yet is increasingly common. Where retirement income
products which require a high level of engagement and control are
issued, it may be prudent to establish ongoing obligations on fiduci-
aries to ensure that there is not an unacceptable risk being posed to
the individual’s retirement savings because of the disengagement or
negligence which afflicts many in a busy world.
In practice, this might look at monitoring the frequency of trad-
ing, investment decisions or even viewing information. If there is
a significant change, it may be prudent for the fiduciary to engage
with the decision maker to gently remind the decision maker that
they haven’t been engaging enough. Similarly, frequent viewing, or
switching between high level managed products might indicate that
the decision maker is incurring unnecessary costs and might be more
suited to products which require a higher level of tactical engagement
and control.
Rate of savings
The rate of savings for an individual is a central aspect of retirement
income decision making. Indeed, it is at the centre of Modigliani’s
theory of logical, self-interested decision making. While there are
mandatory minimum savings rates for occupational pensions im-
posed in some countries (like Australia), individuals typically have
the ability to decide on a savings rate or accept a default rate. Deci-
sions about the level of savings are fundamental to retirement income
planning, and similarly remain susceptible to behavioural biases
which may result in irrational and undesirable outcomes.
Figure 7.
Figure 8.
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The quote
Few would disagree
with the notion that it
makes good economic
sense to save for
retirement.
The Peltzman Effect is the tendency for individuals to
take greater risks when perceived safety increases. Where
individuals perceive a degree of safety in retirement in-
comes due to expectations of government age pensions or
family dependency, they may be more likely to make risk-
ier decision such as not saving adequately or at all where
the perceived safety of a state funded pension is assumed.
Mandated or default rates of savings have many posi-
tive aspects, but may lead to perceptions of safety in that
the rate of savings is appropriate, even where it not align
with individual needs or expectations for retirement.
The risk of inadequate savings due to a perception of
safety can however be addresses relatively easily.
Effective projection and communication of what reli-
ance on a state funded pension or a minimum default
rate of savings may look like in terms of income and
resulting impacts on lifestyle may be quite effective in
calling out misconceived safety. Focusing on projections
of retirement incomes and the resulting lifestyle changes
that might be required are likely to be an effective way to
motivate individuals to save at rates more consistent with
their desired lifestyle in retirement.
Preservation
The preservation of saved assets is the alternate side
of the savings equation. Decisions about savings and
spending are intertwined so tightly that they can almost
be considered two sides of the same coin. Spending be-
haviour and decisions directly impact the level savings,
and vice versa.
Preservation is typically imposed on retirement sav-
ings until retirement, with individuals unable to access
savings until retirement, however there are exceptions
to this. The preservation of savings takes on additional
significance in the retirement phase, as a key factor con-
tributing to longevity risk. Behavioural biases exist which
may affect the ability of decision makers to effectively
preserve retirement savings in the self-interest or best in-
terests of retirees.
Hyperbolic discounting is the tendency for individuals
to preference immediate pay-offs rather than later pay-
offs. A dollar today is valued higher than five times the
amount next month. Essentially, choices and decisions
are inconsistent over time, with individuals making deci-
sions today that their future self would not despite using
the same reasoning. In many ways, hyperbolic discount-
ing can be regarded as the central behavioural bias which
retirement income policies and systems intend to man-
age. The fact that individuals place a greater value on the
immediate spending over future needs.
Retirement income systems are generally designed to
ensure that savings are preserved, and do a reasonable
job of managing the tendencies we have towards hyper-
bolic discounting. Yet, there remains an important role
for public policy makers and fiduciaries to ensure that
preservation decisions are adequate to manage longev-
ity risk. This could well involve prioritising a base level
of annuity type products in retirement and discouraging
lump sum payments and commutations which increase
the risk of hyperbolic discounting seeing accumulated
savings being exhausted prematurely.
Asset allocation
The investment of retirement savings is absolutely cen-
tral to the role which fiduciaries and (increasingly) in-
dividuals play in planning for retirement. The rational
agent model of self-interest dictates that investment de-
cisions should be directed towards maximising the long
term financial performance of investments, in a manner
appropriate with the horizon and risk profile of the indi-
vidual beneficiary.
Investment decision making consists of strategic and
tactical aspects, and is the domain of significant com-
plexity and maturity within investment management en-
tities and fiduciaries. While investment managers are not
immune to behavioural biases, it is critical that particular
attention is paid to ensuring that the retirement income
products which allow individuals significant control over
the strategic and tactical asset allocation are not compro-
mised by the inherent behavioural biases which can im-
pact investment decision making. While there are a large
number of such biases which make for a messy view of
investment decision making, there are couple which are
particularly interesting and relevant.
The disposition effect is the tendency to sell an asset
that has accumulated in value and resist selling an asset
that has declined in value. Where individuals are per-
mitted or encourages to control the tactical investment
decision making, decisions can be made to buy and sell
specific assets such as equities, bonds or units in a trust.
This enhances the possibility for investment decisions to
be affected by the disposition effect. The greater trans-
parency as of buy and sell prices for particular assets
increase the likelihood that individual decision makers
will irrationally hold on to poor performing assets rather
than cutting losses and disposing of performing assets
prematurely.
Public policy makers and fiduciaries need to be par-
ticularly mindful of these risks when designing regula-
tions and products which permit an individual approach
to managing investments. Fiduciaries are well placed to
monitor individual investment decision making, and may
be able to identify such patterns in trading activity, and
communicate this to individuals controlling strategic or
tactical investment decisions.
The gambler’s fallacy also presents a behavioural
challenge to investment decision making. It is the ten-
dency for an individual to think that future probabilities
are altered by past events, when in reality they are un-
changed. The fallacy arises from an erroneous conceptu-
alization of the law of large numbers. For example, “I’ve
flipped heads with this coin five times consecutively, so
the chance of tails coming out on the sixth flip is much
greater than heads.”
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The quote
The framing effect
is a cognitive bias
characterised by the
arrival at different
conclusions.
The same principle is often observed in the decisions
of individuals, with a tendency for investment decisions
to be directed towards investments which have per-
formed best in the recent past. To agree, this bias can be
a self-fulfilling prophecy, with the increased demand for
well performing investments impacting on the value and
therefore performance. However longer term it’s impor-
tant that a broader range of economic fundamentals are
considered when making investment decisions. Fiduciar-
ies may be better placed to do this than individuals, and
thought needs to be given to extending the regulation of
investment decision making beyond ineffective warnings
in disclosure rules.
Zero-risk bias is a preference for reducing a small risk
to zero over a greater reduction in a larger risk. In the
context of asset allocation, such a bias can result in a ten-
dency for individuals to invest in assets perceived as be-
ing risk free (such as cash) instead of alternatives which
provide a greater return for a similar level of risk. This
is particularly relevant for retirees who typically have a
risk profile with a lower appetite for investment related
risks. There is the real possibility that a low risk appetite
is irrationally afflicted by a tendency to prefer options
perceived as being risk free. There are measures which
can be effective in identifying where cash holdings may
be over invested in due to a perception of cash being a
zero-risk investment.
The Mere exposure effect is the tendency to express
undue liking for things merely because of familiarity
with them. Asset allocation may involve the selection
of equities or other investments which are overvalued
due to a familiarity of the decision maker with the par-
ticular investment. The financial media is the source
of much useful information, but it also creates infor-
mation clusters here individuals overvalue investments
in familiar equities or other investments. A filter or
lens may be able to be implemented in systems which
will mask names of companies and investments while
focusing the decision maker’s attention on quantitative
financial data such as P/E ratios. Making such tools
available to investment decision makers may prove an
effective way of promoting more rational investment
decision making.
Risk appetite and management
An aspect of retirement income planning which tends to
receive much less attention than it should is risk manage-
ment. There are a broad range of risks which a rational
retirement income decision maker would be expected to
address. The most critical risks to be considered in re-
tirement income planning include early retirement due
to death or disablement, longevity risk, sequencing risk
and market cycle investment risk. Like other decisions,
the risk appetite of decision makers is potentially afflicted
to behavioural biases which may result in irrational and
inadequate decisions being made about managing retire-
ment income risks.
Normalcy bias and optimism bias are two observable
tendencies in decision making behaviour which have the
genuine possibility of influencing decisions about the ap-
propriate appetite for risk. Normalcy bias is the refusal
to plan for a disaster which an individual has not experi-
enced before.
Retirement is an event which individuals will not gen-
erally experience until later in life. Retirement in itself
is certainly not a disaster but rather something which
should be valued; however, most people would consider
retirement without access to income required for subsist-
ence or a dignified retirement as a disaster.
The normalcy bias of expecting that an income will be
available in retirement much as it is during working years
has a significant influence over the decisions individuals
about the level of savings. The identification of normalcy
bias in the decision making of governments, fiduciaries
and individuals may materialise as an understated rate of
savings. In a similar tone, optimism bias is the tendency
individuals have towards over optimism, overestimating
favourable outcomes.
The illusion of control is the tendency for decision
makers to overestimate the degree of influence over
other external events. This scientifically observed trait
may also result in a bias for individuals mistakenly feel-
ing as though they are in control of certain risks over
which they exert little or no control. This bias can see
that individuals irrationally choose not to mitigate such
risks through mutualisation or insurance of these risks,
as they believe that they are in control of the risks of liv-
ing longer than expected, early retirement or the impact
of market cycles on investments.
While there is a quantifiable risk to individuals of early
retirement due to disability, living longer than expected
or the sequence of market movements negatively affect-
ing retirement incomes, biases towards normalcy and
optimism, coupled with the illusion of control may be
contributing to irrational decisions being made by in-
dividuals and fiduciaries. Automatic acceptance into
group insurance policies has proven to be relatively ef-
fective in broadening the coverage of insurance products
designed to manage early retirement or disability risks
for individuals exhibiting lower levels of engagement and
involvement.
However, principles of risk profiling and management
are often only applied at an enterprise level. When it
comes to retirement income planning or management,
there may be significant merit to developing mechanisms
aimed at identifying the relevant risks to and controlling
within an individual appropriate appetite.
Fees, costs efficiency
It is impracticable for most individuals, and even fi-
duciaries to adequately implement a retirement income
strategy without some outsourcing. Individuals rely on
products and services supplied by third parties in im-
plementing their retirement income planning strategy,
hopefully appropriate to their level of engagement.
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Naturally, this will see that fees and costs are incurred in exchange
for the provision of these products and services. It’s important that
retirement incomes aren’t adversely affected by excessive fees and
costs which might be incurred by either the individual or fiduciary.
Similarly, it is important to governments that systemic efficiency
within the financial product and service supply chains.
The availability of information about fees and costs is an important
characteristic of an efficient market, yet, there are also behavioural
biases which can result in systemic inefficiencies in the markets for
financial products and services which form the supply chains. Any
market for retirement income focused financial products and servic-
es is unlikely to take a strong efficiency form due to the existence of
behavioural biases.
The framing effect is a cognitive bias characterised by the arrival
at different conclusions based on the same information due to the
way in which it’s presented. The impact of the framing effect on deci-
sions about fees and costs means that the disclosure of retail fees and
costs to individuals, and wholesale fees and costs to fiduciaries can
significantly impact decision making and therefore the efficiency of
retirement income decisions and systems.
The presentation of fees as a percentage of a transaction or asset
value are a classic example of this, with the presentation of the costs
in a unit of currency resulting on the decision maker placing a greater
weighting or emphasis on the competitiveness of the fees and costs.
Similarly, the framing of fees as a percentage or in basis points disas-
sociates the fees and costs from the currency required to pay them
and results in a lower weighting and focus on the competitiveness of
fees and costs.
Anchoring is a tendency for a decision maker to take existing
fees and costs incurred for financial products and services and
then apply it as a subjective reference point for making future de-
cisions. This is particularly relevant with percentage based fees on
a growing asset base. The supplier of a product or service which
charges a percentage based fee will naturally be anchored at the
current price.
The anchor of the current price will result in decision makers
considering any reductions in the percentage based fee as a reduc-
tion, even where the asset base on which the fees are calculated in
growing and therefore the actual amount of the fee in increasing.
Asset based fees and costs are common in the supply of the finan-
cial products and services to retirement income systems. Ensuring
that individuals and fiduciaries are provided information about the
actual costs of financial products and services, including the cost at
projected asset values.
Think again!
The ways in which the insights from behavioural finance and eco-
nomics can translate into meaningful measures will differ signifi-
cantly between jurisdictions, entities and individuals. Yet, there seem
to be significant opportunities for behavioural science to provide in-
sights which will force lawmakers and fiduciaries to think again. As
changes to old age dependency ratios will present a daunting eco-
nomic and political challenge to many western economies, improv-
ing the performance and efficiency of retirement income systems and
pension funds is a challenge which will need to strike the right bal-
ance between dependence and independence. fs
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