In 2000, researchers Brigitte Madrian and Dennis Shea analyzed the 401(k) savings behavior of employees in a large U.S. corporation before and after an interesting change in the company 401(k) plan.
Before the plan change, employees were not automatically enrolled as participants in the company 401(k) plan upon being hired and were required to complete paperwork if they wanted to opt in. After the plan change, new employees were automatically enrolled in the 401(k) plan and were required to complete paperwork if they wanted to opt out. The amount of time and effort required to either opt in or opt out was approximately equal. None of the economic features of the plan changed.

-A finding of no significant difference in 401(k) plan participation after the plan change provides evidence that employee 401(k) participation decisions are made ___________ effects do not exist in the context of 401(k) plan participation.

Question

Quizplus · Accepted Answer

Rational decision-making suggests that employees evaluate the pros and cons of 401(k) participation based on objective factors, such as the match rate, investment options, and fees. Thus, the lack of significant difference in participation after a plan change suggests that employees are making rational decisions based on the information provided through framing (i.e., how information is presented). This is supported by research showing that framing can influence 401(k) participation decisions.

In 2000, Researchers Brigitte Madrian and Dennis Shea Analyzed the 401(k)