Behavioral Finance

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The psychology of decision making

How information is presented, or “framed,” and other personal biases affect decision-making. The TIAA Institute focuses on such issues as how to motivate people to make decisions about when to claim Social Security, whether or not to annuitize, and how to save for retirement. 

Insights

January 2013

Annuities are not popular despite providing valuable insurance against outliving one’s savings.

November 2010

Advisors need to understand the way investors think about decisions and the process through which decisions are made.

December 2008

Despite agreement among experts that many consumers should place a high value on life annuities and related products that insure against longevity risk, few consumers voluntarily annuitize their retirement savings.

Research Reports

September 2013

We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an “all or nothing” decision.

August 2013

Financial product ratings are intended to summarize relevant information in a manner that assists in decision-making, but may be harmful. Ratings are often assigned within categories; ratings across categories may not be comparable.

January 2011

A growing literature shows how consumers make mistakes in a variety of different settings pertinent to financial decision-making.