U.S.employees who formerly wanted to defer part of their compensation to a 401(k)retirement plan typically had to lower their take-home pay as they "opted in" to the plan.Now companies are being encouraged to enroll their employees in the 401(k)plan automatically while allowing them to choose to raise their take-home pay by "opting-out" of the 401(k)plan.Under the "opt out" rather than "opt-in" system,enrollments in 401(k)plans soared.This best illustrates the impact of

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This scenario is an example of framing, which refers to the way in which information is presented, and how it can influence people's decisions. By changing the default option from "opt-in" to "opt-out," companies were able to increase enrollment in 401(k) plans because people were more likely to stick with the default option. This shows that the way in which decisions are presented can have a significant impact on the choices that people make.

USEmployees Who Formerly Wanted to Defer Part of Their Compensation