Positive and Negative Recency Effects in Retirement Savings Decisions

Rieskamp, J�rg
December 2006
Journal of Experimental Psychology. Applied;Dec2006, Vol. 12 Issue 4, p233
Academic Journal
Retirement savings decisions can be influenced by the fund composition of the retirement savings plan. In 2 experiments, strong composition effects were observed, with a larger percentage of resources being invested in stock funds when more stock than bond funds were offered. Although participants changed their allocations repeatedly, the opportunity to learn did not alter the composition effects. Learning processes led to positive and negative recency effects as well, providing evidence that allocations were strongly influenced by the recent performance of the different allocation options. Two learning models were tested to explain these learning processes. The first, a local adaptation learning model, assumes that people change their behavior on the basis of recent experience, whereas the second, a reinforcement learning model, assumes that decisions are made on the basis of the totality of accumulated experience. The local adaptation model was more accurate in predicting allocation decisions, in explaining positive and negative recency effects, and in showing why composition effects are not overcome by learning.


Related Articles

  • Repairing the damage.  // Money Today;Oct2014, p2 

    The article discusses the common mistakes that people make with regard to retirement savings and offers solutions for correcting them. Topics covered include the tendency of people to start saving for retirement during the latter part of their productive years, a suggestion for people to delay...

  • Utilising workplace savings. Watts-Lay, Jonathan // Employee Benefits;Feb2011, Special section p2 

    In this article, the author discusses the understanding of the benefits gained from the use of workplace savings in Great Britain. He comments that employees who do not engage on financial education will obtain a difficulty in terms of their short-term or long-term retirement savings. The author...

  • Retirement Savings Solutions for Dentists. Haik, Ron // Ontario Dentist;Jan/Feb2013, Vol. 90 Issue 1, p38 

    The article proposes retirement savings strategies and investment solutions for dentists. Several factors are considered when investing for retirement. It compares the registered retirement savings plan (RRSP) and tax-free savings account (TFSA), their tax advantages, contributions, savings and...

  • The financial facts of life.  // Asian Pacific Post;10/25/2007, p18 

    The article discusses some of the most common life stages that require different investment strategies. During early adulthood, saving for retirement may be as simple as setting up a savings plan where retirement savings plan (RSP) contributions are automatically deducted from a bank account....

  • KiwiSaver participation grows.  // Human Resources Magazine;Apr/May2008, Vol. 13 Issue 1, p33 

    This article focuses on the increase in membership with KiwiSaver in New Zealand. The proportion of Kiwis who have joined this savings scheme have increased significantly from 14 percent to 25 percent since October 2007. This growth in membership has coincided with the growing consideration...

  • Resource Allocations in United Funds: Examination of Power and Dependence. Pfeffer, Jeffrey; Leong, Anthony // Social Forces;Mar77, Vol. 55 Issue 3, p775 

    ABSTRACT Allocations to member agencies in 1962, 1967, and 1972 were examined for a sample of 66 United Funds. It was argued that the allocations to agencies would be a function of the power of the agency in the Fund, which was determined by the agency's dependence on the Fund and the Fund's...

  • Green Investing. Kridel, Tim // Mother Earth News;Jun/Jul2005, Issue 210, p72 

    Offers advice on socially responsible investing after retirement (SRI). Amount of SRI in the U.S. in 2003, according to a study by Social Investment Forum; Information on mutual funds; Importance of research when investing. INSETS: The Importance of Investing;Community Investing.

  • Income Strategies for the sunset years. Hylton, Richard D.; Moore, Alicia Hills // Fortune;7/24/1995, Vol. 132 Issue 2, p110 

    Offers information and advice on investing for your retirement. How longer life spans and inflation mean that new approaches to saving and investing need to be applied; Advice to cut back on bonds and load up on stocks; Mutual funds with high income; Why you shouldn't be too conservative with...

  • boost your money confidence. Quinn, Jane Bryant; Magnarelli, Margaret // Good Housekeeping;May2004, Vol. 238 Issue 5, p103 

    Focuses on several ways to boost money confidence. Discussion on getting rid of debts; Advice on increasing retirement savings; Importance of dealing with mutual funds; Rules on organizing retirement savings.


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics