Adverse Selection in the Annuity Market with Sequential and Simultaneous Insurance Demand

Brunner, Johann K.; Pech, Susanne

doi:10.2139/ssrn.348083

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Adverse Selection in the Annuity Market with Sequential and Simultaneous Insurance Demand

39 Pages Posted: 11 Nov 2002

See all articles by Johann K. Brunner

Johann K. Brunner

University of Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Susanne Pech

Johannes Kepler University Linz - Department of Economics

Date Written: October 2002

Abstract

This paper investigates the effect of adverse selection on the private annuity market in a model with two periods of retirement. In order to introduce the existence of limited-time pension insurance, we assume that for each period of retirement separate contracts can be purchased. Demand for the two periods can be decided either sequentially or simultaneously. We show that different risk-groups prefer different types of contracts, and that only the sequential contracts, which are favourable for the long-living individuals, represent an equilibrium. Lifetimes, Equilibrium

Keywords: Annuity Markets, Adverse Selection, Uncertain

JEL Classification: D82, D91, G22

Suggested Citation: Suggested Citation

Brunner, Johann K. and Pech, Susanne, Adverse Selection in the Annuity Market with Sequential and Simultaneous Insurance Demand (October 2002). Available at SSRN: https://ssrn.com/abstract=348083 or http://dx.doi.org/10.2139/ssrn.348083