Exploring the experimental economics approach in pensions
Working Paper No. 43
by John D. Hey
The DWP is interested in an evaluation technique called experimental economics, which economists are increasingly using to inform their academic research.
One conventional way to understand the determinants of private pension provision is to analyse real-life data by carrying out a statistical analysis of existing data on pension allocations. An alternative way is to use an economics experiment to replicate the decision-making process. In an economics experiment, participants are asked to carry out some decision tasks under carefully controlled conditions (usually taking place in a laboratory) in order to approximate to, or abstract from, the corresponding decision problem they face in real life. By offering participants monetary payments, an economics experiment aims to reveal their true behaviour or preferences.
This paper examines the feasibility and effectiveness of conducting experimental economics in DWP research and investigates individuals' pension saving behaviour and fund choice decisions.
January 2008
ISBN 978 1 84712 327 5
Exploring the experimental economics approach
in pensions 
(1.06MB)