Moreover, participants' choices are often affected by the presentation of the options. Thus, companies offering retirement savings accounts such as 401(k) plans face a delicate balancing act. While they desire to shift the maximum degree of decisionmaking to workers, they must acknowledge that basic plan-design choices will affect the long-term retirement security of their employees.
In principle, the task is to evaluate the expected loss arising from these imbalances, where this is the multiple of the probability of financial stress times the loss given stress, and to compare this to the costs associated with the use of policy instruments to avoid the problem. No aspect of this calculus is easy.