Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/219660 
Authors: 
Year of Publication: 
2015
Series/Report no.: 
Institute of Economic Research Working Papers No. 44/2015
Publisher: 
Institute of Economic Research (IER), Toruń
Abstract: 
In this paper we focus on an adverse effect of extensive choice widely known as 'choice overload'. We draw on the case of Swedish funded pensions for illustration and analyze consequences of the design that allowed for maximizing the choice set. The analysis shows limitations of employing the rational choice approach to the real choice decisions biased with common psychological factors and demonstrates that government's responsibility for the privatized pension system does not end with the design. We also emphasize the need for a decent default option, which would mitigate socially harmful results of adverse behavior effects like procrastination, status quo bias or abstaining from choice. After all, privatized pension systems still belong to a sphere of public policy.
Subjects: 
extensive choice
cognitive limitations
market failure
choice architecture
funded pensions
JEL: 
D19
H44
H55
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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