Rare events and annuity market participation

Paula Lopes and Alexander Michaelides

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We investigate whether a rare event (like the default of the annuity provider) can explain the annuity market participation puzzle. High risk aversion is needed to change behavior in the presence of such a disastrous shock but higher risk aversion also makes annuities more valuable. Therefore, these rare events are unlikely candidates to explain the low take-up of voluntary annuities.

Keywords: annuity provision; saving during retirement; rare events (search for similar items in EconPapers)
JEL-codes: E21 H00 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2005-11-01
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http://eprints.lse.ac.uk/24672/ Open access version. (application/pdf)

Related works:
Journal Article: Rare events and annuity market participation (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:24672

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