29 Pages Posted: 22 May 2013
Date Written: June 2013
I examine the effect of envy on the portfolio allocation of workers in a defined contribution (DC) pension plan. If a worker’s DC plan performs better than his co‐worker’s, he may gloat; on the other hand, if his DC plan performs worse, he may feel envy. I model anticipated envy when workers make portfolio allocations, and find that in equilibrium, workers will mimic their co‐worker’s allocation to eliminate the disutility from envy. This portfolio allocation is riskier than that of a worker who does not exhibit envy.
Suggested Citation: Suggested Citation
Volkman Wise, Jacqueline, Pension Portfolio Choice and Peer Envy (June 2013). Journal of Risk and Insurance, Vol. 80, Issue 2, pp. 461-489, 2013. Available at SSRN: https://ssrn.com/abstract=2268308 or http://dx.doi.org/10.1111/j.1539-6975.2012.01471.x
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