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Book Title

Pension Design and Structure: New Lessons from Behavioral Finance

Chapter One: Lessons from Behavioral Finance for Retirement Plan Design
Olivia S. Mitchell and Stephen P. Utkus

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This paper evaluates some of the key lessons of behavioral economics and finance research over the last decade for pension plan design. We divide the discussion into the natural phases of the retirement saving life cycle: accumulation, investment, and decumulation. After reviewing the lessons of behavioral finance, we conclude by outlining plan design alternatives that would be of use to plan sponsors and policymakers seeking to design more cost-effective and efficient retirement plans for the future.