Auctioning Annuities with Two Sided Private Information

Maria Florencia Gabrielli, Gaurab Aryal, Eduardo Fajnzilber and Manuel Willington

No 4804, Asociación Argentina de Economía Política: Working Papers from Asociación Argentina de Economía Política

Abstract: We propose and estimate a model of demand and supply of annuities. To this end, we use rich data from Chile, where annuities are bought and sold in a private market via a two-stage process: rst-price auctions followed by bargaining. We model rms with private information about costs and retirees with di erent mortalities and preferences for bequests and rms' risk ratings. We nd substantial costs and preference heterogeneity, and because there are many rms, the market performs well. Counterfactuals show that simplifying the current mechanism with English auctions and\shutting down" risk ratings increase pensions, but only for high savers.

JEL-codes: C57 D14 D44 D91 J26 L13 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2025-12
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