EconPapers    
Economics at your fingertips  
 

Optimal design of pension funds: a mission impossible?

Anja De Waegenaere (), Jeroen Suijs and Peter Borm

Economic Theory, 2003, vol. 22, issue 1, 89-110

Abstract: Nowadays many employers offer their employees the possibility of an insurance against too large losses in income when retiring or becoming disabled. This paper models the optimization problem of the employer when setting up such a so-called pension fund. Not surprisingly, it turns out that the optimal solution depends on the premium the employees are willing to pay at most for such an insurance. Since this is private information for an employee and hence not known to the employer, he needs to collect information regarding these maximum premiums. It is shown that if employees' characteristics only differ in the maximum premium they are willing to pay, the employer is unable to perfectly inform himself on these maximum premiums, i.e. he cannot create the right incentives for his employees to reveal their maximum premiums truthfully. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Keywords and Phrases: Pension funds; Insurance; Bayesian implementation.; JEL Classification Numbers: C72; D81; D82. (search for similar items in EconPapers)
Date: 2003
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1007/s00199-002-0278-7 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:22:y:2003:i:1:p:89-110

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-002-0278-7

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-20
Handle: RePEc:spr:joecth:v:22:y:2003:i:1:p:89-110