Pamela Barboza

This study aims to discuss the principles of Nudge Theory, its roots in Behavioral Economics in addition to its applicability on pension plans. The characteristics of Behavioral Economics, the Homo Economicus concept by Richard Thaler jointly with both systems introduced by Daniel Kahneman will be analyzed. To reinforce the study, numerous cognitive biases will be exposed and analyzed, including the studies presented on Dan Ariely’s book. At the end, the applicability of the nudge theory as a reinforcement and supplement for retirement readiness will be introduced, exemplifying the Funpresp success case that through the default option increased the number of members considerably in addition to the use of nudges in the Save More Tomorrow program that encourages the individual to commit next year’s salary raise, by using the loss aversion bias since the individual will not have a loss of life style at the moment of the commitment.