Income variability and selection of the pension system

Bilge Ozturk Goktuna

Managerial and Decision Economics, 2019, vol. 40, issue 3, 267-276

Abstract: This paper provides a simple two‐period, game theoretic set‐up with heterogeneous agents to analyse individual selection of a pension scheme by different categories of agents. Agents have been differentiated according to their income variability. We describe Bayesian equilibria and provide examples to illustrate. The design of a pension scheme requires the consent of all the population, and we have shown that differences of volatility of income contribute to the divergence regarding the decision of a pension investment alternative. We also provide support for the subsistence of unfunded scheme in economies with demographic aging and with promising returns in funded alternatives.

Date: 2019
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https://doi.org/10.1002/mde.3000

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:40:y:2019:i:3:p:267-276

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