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Assuming loss aversion, stochastic investment and labor income processes, and a path-dependent target fund, we show that the optimal investment strategy for defined contribution pension plan members is a target-driven 'threshold' strategy. With this strategy, the equity allocation is increased...
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We estimate loss aversion using on an online survey of a representative sample of over 4,000 UK residents. The average aversion to a loss of £500 relative to a gain of the same amount is 2.41, but loss aversion varies significantly with characteristics such as gender, age, education, financial...
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Assuming the loss aversion framework of Tversky and Kahneman (1992), stochastic investment and labour income processes, and a path-dependent fund target, we show that the optimal investment strategy for defined contribution pension plan members is a target-driven ‘threshold' strategy, whereby...
Persistent link: https://www.econbiz.de/10012997284