A Review of Major Influences on Employee Retirement Investment Decisions

The recent retirement plan debacle of the Enron employees has caused regulators and lawmakers to think about new ways to protect and help retirement plan participants. When investigating participant investment decisions, researchers have traditionally studied the retirement plan characteristics and employee characteristics. More recently, some researchers have extended the analysis to social influences, such as social norms and peer affects. Others have expanded into behavioral finance and examined the role of various psychological biases. This paper combines and summarizes these four sets of influences so that researchers and policy makers can better understand all the influences affecting an employee when making retirement plan contribution and investment decisions.