Behavioral biases in annuity choice
Last registered on June 10, 2019

Pre-Trial

Trial Information
General Information
Title
Behavioral biases in annuity choice
RCT ID
AEARCTR-0004226
Initial registration date
May 29, 2019
Last updated
June 10, 2019 10:30 PM EDT
Location(s)

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Primary Investigator
Affiliation
UC Berkeley Economics
Other Primary Investigator(s)
PI Affiliation
UC Berkeley
PI Affiliation
Dartmouth
Additional Trial Information
Status
On going
Start date
2019-05-10
End date
2020-06-30
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://www.socialscienceregistry.org/trials/4226/history/47909
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
Not available
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)
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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