Framing bias is seen in company retirement plans and can take two different forms: 1) when given the choice among different funds to invest in the investor allocates their investments evenly among the different funds which is also called 1/n naïve diversification and, 2) when a company match is in the form of company stock the employee frames this as implicit advice and subsequently allocates a higher proportion of their own contributions to the company’s stock. Excessive trading is seen in discount brokerage accounts as compared to company retirement plans. Availability of more investment options in a discount brokerage account is thought to lend itself to more excessive trading along with trading oriented individuals self-selecting into the discount brokerage account. |
