Asset Allocations in a Thai Defined Contribution Fund: A Behavioural Experiment Conditioned on Financial Expertise

Abstract

This paper reports the results of a behavioural experiment on the ability of Thai individuals to make informed investment decisions under a defined contribution self-management option. Using an asset allocation dataset from members of the Thai Government Pension Fund (TGPF) and a control sample of financially knowledgeable individuals (MBA finance students), we report that TGPF members are relatively more risk averse, exhibit a greater home investment bias, and overreact to market price movements. Financially savvy MBA students hold more shares and international securities, and earn greater long-term returns. The fact that the emotional TGPF members' allocations outperform the TGPF default plan, along with strong preferences for time liquidity diversification, provide challenges for TGPF managers to review their financial engineering and to lobby for a revision of the restrictive investment ceilings.

The mediation and moderation effect of risk preferences on time preference and financial literacy

“…The study is one of the few studies conducted in non-western, educated, industrialised, rich, and democratic(non-WEIRD) countries. Studies that have focused on students from different countries include Santos et al (2019) in Brazil, Skimmyhorn et al (2016) in America, Nemeczek and Weiss (2023) in Germany, and Budsaratragoon et al (2016) in Thailand. These studies mainly focused on other regions other than Sub-Sahara Africa.…”