This paper considers the question of why the annuity market is thin. A model is presented in which consumers have the option of purchasing annuities before discovering their survival probability; they can then recontract the initial choice after the resolution of this form of uncertainty. It is shown that consumers purchase insurance against their own survival-probability type at a very young age and do not undertake further transactions. This characterization is then used to analze the effects of introducing future income uncertainty and to investigate the trade-off between old age insurance motive and portfilio flexibility.
Authors
Research Fellow Ca' Foscari University of Venice
Agar is a Research Fellow of the IFS and a Professor in the Department of Economics at the University of Venice,
Journal article details
- DOI
- 10.1016/0047-2727(93)90059-3
- Publisher
- Elsevier B.V.
- Issue
- January 1993
Suggested citation
Brugiavini, A. (1993). 'Uncertainty resolution and the timing of annuity purchases' (1993)
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