The Efficiency and Characteristics of Investment Choices Offered by 401(k) Pension Plans


The proposed research seeks to investigate the adequacy and characteristics of investment choices offered by 401(k) plans. When constrained or inappropriate investment menus are offered to participants, they may experience decreases in returns as compared to a benchmark efficient portfolio. The goal, therefore, is to produce a working paper which measures the efficiency shortfall patterns in pension plan menu offerings, and to characterize these according to employee and plan characteristics. We do this so as to gain insight regarding the efficiency of investment menus offered in 401(k) plans, so that in future work we can further explore the investment efficiency of participants given the investment opportunities and the corresponding loss from participant investment choices which depart from the efficient ones.

Funded By: 
Award Dates: 
July 1, 2006 - June 30, 2007
PARC Grant Year: 
Year 13