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 "opting out" rather than "opt-in" system, enrollments in 401(k) plans soared. This best illustrates the impact of

Question

Quizplus · Accepted Answer

The scenario describes the impact of framing, where the way the options are presented (opting in vs opting out) affects the decision-making of individuals. By presenting the option to enroll in the 401(k) plan as the default (opt-out), enrollment rates increased. This is an example of how the way information is presented can influence decision-making.

US Employees Who Formerly Wanted to Defer Part of Their