What Matters in the Annuitization Decision?

28 Pages Posted: 4 Nov 2020 Last revised: 21 Jun 2021

See all articles by Mohamad Hassan Abou Daya

Mohamad Hassan Abou Daya

Grenoble Ecole de Management

Carole Bernard

Grenoble Ecole de Management; Vrije Universiteit Brussel (VUB)

Date Written: September 15, 2020

Abstract

We conduct a simultaneous test for several rational and behavioral factors, which have been
hypothesized to affect the uptake of life annuities on a sample of American individuals. In
addition, we investigate whether analysts’ short-term stock market expectations affect the
decision to annuitize retirement wealth. We provide evidence that the effect of such
expectations depends on the level of trust in them. We attribute our findings to the
availability heuristic and present bias. Lastly, we discuss the mediating role of annuity
antipathy. Our results provide guidance for policymakers and annuity providers as well as
venues for future research.

Keywords: Annuities Demand, Trust in Financial Analysts, Multiple Factors Test

JEL Classification: G11, J26

Suggested Citation

Abou Daya, Mohamad Hassan and Bernard, Carole, What Matters in the Annuitization Decision? (September 15, 2020). Available at SSRN: https://ssrn.com/abstract=3693191 or http://dx.doi.org/10.2139/ssrn.3693191

Mohamad Hassan Abou Daya (Contact Author)

Grenoble Ecole de Management ( email )

12 Rue Pierre Semard
Grenoble, Cedex 01 38000
France

Carole Bernard

Grenoble Ecole de Management ( email )

12, rue Pierre SĂ©mard
Grenoble Cedex, 38003
France

Vrije Universiteit Brussel (VUB) ( email )

Pleinlaan 2
http://www.vub.ac.be/
Brussels, 1050
Belgium

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