The current 401K plan at a work place is voluntary, and employees have to opt in. An HR manager believes that default en

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The Current 401k Plan At A Work Place Is Voluntary And Employees Have To Opt In An Hr Manager Believes That Default En 1 (61.7 KiB) Viewed 114 times

The current 401K plan at a work place is voluntary, and employees have to opt in. An HR manager believes that default enrollment of all employees in the 401K plan with an option to opt out leads to a higher participation rate. Let p1 be the population proportion of participation with the opt in plan (current) and let p2 be the population proportion of participation with the opt out plan (proposed). We have these hypotheses: HO: p1 ≥ p2, H1: p1 <p2 Obviously, if HO is right, we should stay with the current approach, but if we favor H1, we should enroll people by default. What would be the implication of a type I error? we stay with the current plan, even though the new plan would have higher participation we force enrollment of employees who refuse to participate in the 401k plan we drop the enrollment of employees who are already on the 401k plan we enforce the opt-out plan even though the current plan had higher participation