Historically, participation in employer-sponsored retirement saving programs has been characterized by "opt in;" eligible employees go to the company's Human Resources office and fill out a form so that they can start having deductions from their paycheck go into a retirement savings account. Recently, many companies have switched to an "opt out" model for their retirement plans: eligible workers are automatically enrolled in the plan and have to go to their Human Resources office and fill out a form if they do not want to participate in the plan. This change in how employees enroll in retirement savings programs at their employer is an example of ________.

Question

Quizplus · Accepted Answer

Switching from an "opt in" to an "opt out" model for retirement savings plans is an example of a "nudge." This approach subtly encourages employees to participate in retirement savings by making enrollment the default option, thereby leveraging human behavior and inertia to promote better financial planning without restricting freedom of choice.

Historically, Participation in Employer-Sponsored Retirement Saving Programs Has Been Characterized