Pension Portfolio Choice and Peer Envy

29 Pages Posted: 22 May 2013  

Jacqueline Volkman Wise

Temple University - Risk Management & Insurance & Actuarial Science

Date Written: June 2013

Abstract

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

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

Jacqueline Volkman Wise (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

Paper statistics

Downloads
0
Abstract Views
432