Behavioral Finance

Behavioral finance involves analysis of the way in which cognitive and emotional biases affect the way that people make decisions. Behavioral finance is important in the context of Annuity Digest because there are so many biases that obstruct rational decision making when it comes to the use of annuities (see the term annuity puzzle).

Richard Thaler on Annuities

Richard Thaler is a professor at the University of Chicago and he is a renown economist. Best known for his work in the area of behavioral finance, Thaler focuses on how human psychology affects economic decision making. Thaler recently wrote a piece on annuities which was published in the New York Times. The Times article focused on the annuity puzzle . The term annuity puzzle is used to describe the lack of annuity adoption (purchases) relative to what economists would consider rational given...

Meir Statman on the Behavioral Obstacles Affecting Investing and Retirement Planning

Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University, and Visiting Professor at Tilburg University in the Netherlands.

His research on behavioral finance has been supported by the National Science Foundation, CFA Institute, and Investment Management Consultants Association (IMCA) and has been published in the Journal of Finance, Financial Analysts Journal, Journal of Portfolio Management, and many other publications.

A recipient of two IMCA Journal Awards, the Moskowitz Prize for Best Paper on Socially Responsible...

Annuities and Framing

The term "framing" refers to the manner in which the annuity purchase decision is presented or "framed" for the consumer.

The term is from the field of behavioral economics / behavioral finance and involves natural (how we are hard-wired) psychological hurdles that impede the understanding and adoption of annuities.

There is a ton of  material on the issue.

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