Behavioral biases in annuity choice

Last registered on June 10, 2019
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Pre-Trial

Trial Information

General Information

Title
Behavioral biases in annuity choice
RCT ID
AEARCTR-0004226
Initial registration date
May 29, 2019

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
June 10, 2019, 10:30 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United States of America
Region

Primary Investigator

Name
Dmitry Taubinsky
Affiliation
UC Berkeley Economics
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Other Primary Investigator(s)

PI Name
Priscila de Oliveira
PI Affiliation
UC Berkeley
Contact Investigator
PI Name
Erzo Luttmer
PI Affiliation
Dartmouth
Contact Investigator

Additional Trial Information

Status
On going
Start date
2019-05-10
End date
2020-06-30
Keywords
Other
Additional Keywords
annuities
JEL code(s)
Secondary IDs
Abstract
We will run an MTurk experiment to examine several basic biases that we think are present in annuity choice decisions. The study will use simple and abstract decision scenarios that consist of several "accounts" and several states that determine payoffs. The goal of this study will be to test for two biases. The first is the "insurance heuristic"--an aversion to moving currency to a state of the world in which payoffs are already high, even if the marginal utility from currency is also high in that state of the world. The second is status quo bias, which we conjecture to be stronger when the options are more complex.
External Link(s)

Registration Citation

Citation
de Oliveira, Priscila, Erzo Luttmer and Dmitry Taubinsky. 2019. "Behavioral biases in annuity choice." AEA RCT Registry. June 10. https://doi.org/10.1257/rct.4226-1.0
Former Citation
de Oliveira, Priscila, Erzo Luttmer and Dmitry Taubinsky. 2019. "Behavioral biases in annuity choice." AEA RCT Registry. June 10. https://www.socialscienceregistry.org/trials/4226/history/47909
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
The study will use simple and abstract decision scenarios that consist of two "accounts" and two states that determine payoffs in account. The goal of this study will be to test for two biases. The first is the "insurance heuristic"--an aversion to moving currency to a state of the world in which payoffs are already high, even if the marginal utility from currency is also high in that state of the world. The second is status quo bias, which we conjecture to be stronger when the options are more complex, and will depend on the frame.

We will randomize four things, both between and within participants: 1) Which option is the status quo; 2) The expected difference in earnings between the two options; 3) The extent to which the "good" state in account 2 is better than the other state; and 4) whether the two options differ in all states in the second account or just in one of the states. We will also randomize how the status quo is framed. The "basic" frame just endows participants with one option and asks them if they want to exchange it for another option. The "enhanced" frame asks participants if they want to move currency from account 1 to account a state in account 2.
Intervention Start Date
2019-05-10
Intervention End Date
2019-06-30

Primary Outcomes

Primary Outcomes (end points)
The likelihood of choosing option A.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The study will use simple and abstract decision scenarios that consist of two "accounts" and two states that determine payoffs in account. The goal of this study will be to test for two biases. The first is a the "insurance heuristic"--an aversion to moving currency to a state of the world in which payoffs are already high, even if the marginal utility from currency is also high in that state of the world. The second is status quo bias, which we conjecture to be stronger when the options are more complex.The second is status quo bias, which we conjecture to be stronger when the options are more complex, and will depend on the frame.

We will randomize four things, both between and within participants: 1) Which option is the status quo; 2) The expected difference in earnings between the two options; 3) The extent to which the "good" state in account 2 is better than the other state; and 4) whether the two options differ in all states in the second account or just in one of the states. We will also randomize how the status quo is framed. The "basic" frame just endows participants with one option and asks them if they want to exchange it for another option. The "enhanced" frame asks participants if they want to move currency from account 1 to account a state in account 2.

The currency will be points, with each point translated to a 1% chance of winning a $5 prize.
Experimental Design Details

Randomization Method
Randomization done in office by a computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1500

At this point, we ran a pilot with 326 individuals (clusters), which are going to be included in the final analysis.
Sample size: planned number of observations
9000
Sample size (or number of clusters) by treatment arms
N/A: Randomization is both within and between participants.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Berkeley committee for protection of human subjects
IRB Approval Date
2019-03-13
IRB Approval Number
2019-01-11683
IRB Name
DARTMOUTH COMMITTEE FOR THE PROTECTION OF HUMAN SUBJECTS
IRB Approval Date
2019-01-25
IRB Approval Number
STUDY00031523
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials