Information Transmission in Groups: Peer Influence in High-Stakes, Irreversible Financial Decisions

We study the influence of workplace peers on a high-stakes, irreversible retirement plan choice. Mid-career U.S. military personnel choose between higher future pension pay-outs, or an immediate bonus plus lower future pay-outs. With peers defined as those who have locked-in their choices and personnel assignment rules ensuring that peer groups are exogenously formed, we capture the causal impact of peers. Greater peer take-up of the bonus, which is difficult to compare to the alternative plan but often extremely costly over one's lifetime, discourages choosers from selecting the bonus. Peers are especially impactful within professional, race, and gender groups.