Determinants of the use of heuristic choice rules in the Swedish Premium Pension Scheme: An Internet-based survey

The results of previous analyses of citizens’ actual choices of mutual funds in the Swedish compulsory public pension system were replicated in an Internet-based survey of fictitious choices among fund categories. The sample consisted of 392 university employees. Findings indicated a possible default bias, the use of a diversification heuristic, a home bias, and the use of a 1/n heuristic. Involvement in the fund choice, measured by self-rating scales, increased with the amount to invest but decreased with age. Involvement decreased the likelihood of choosing the default fund and was positively correlated with the number of funds included in a portfolio. Home bias and the use of a 1/n heuristic was however unaffected by involvement and by having previous stock market investment experience. Efforts to better inform investors about how to diversify are warranted.