Compulsive Gamblers: The Frequency and Timing of Trades by UK DC Plan Participants

Working paper

18-08-15 |

In defined contribution schemes, participants take responsibility for their investment strategy. After an initial decision, most people do little or nothing until they approach retirement, whereas some participants are active: in some cases they are sophisticated investors, in others, compulsive gamblers. We analyse compulsive traders in a UK multi-employer master trust over the period 2002-2012. We focus on those who switched assets within asset classes and between related products in the context of market volatility and identify who is prone to this behaviour, referring to socio-economic characteristics. Implications are drawn for the design of pension products and institutions.

This paper is co-authored with Maurizio Fiaschetti from the Smith School of Enterprise and the Environment and Peter Tufano from the Said Business School at the University of Oxford.

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