Records of over half a million participants in more than 600 401(k) plans indicate that participants tend to allocate their contributions evenly across the funds they use, with the tendency weakening with the number of funds used. The number of funds used, typically between three and four, is not sensitive to the number of funds offered by the plans, which ranges from 4 to 59. A participant?s propensity to allocate contributions to equity funds is not very sensitive to the fraction of equity funds among offered funds. The paper also comments on limitations on inferences from experiments and aggregate-level data analysis.
Jiang, Wei, and Gur Huberman. "Offering Versus Choice by 401(k) Plan Participants: Equity Exposure and Number of Funds." Journal of Finance 61, no. 2 (April 2006): 763-801.
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