Extraneous menu-effects influence financial decisions made by pension trustees

Pension scheme trustees are responsible for the investment decisions of future generations’ retirement assets. However, behavioural finance research has mostly focussed on retail investors. While trustees are relatively sophisticated investors, they are not immune from biases. Across three experiments, we tested 252 pension scheme trustees for the influence of extraneous manipulations to the menu of options on investment decisions. Trustees were influenced by changes to the menu item mix, context, and layout. Care should therefore be taken when preparing information presented to trustees, in order to reduce biases that can be detrimental to pension outcomes.