Susanne Pech, Johann Brunner,
"Adverse selection in the annuity market with sequential and simultaneous insurance demand"
, in The Geneva Risk and Insurance Review, Vol. 31, Nummer 2, Seite(n) 111-146, 2006, ISSN: 1554-964X
Adverse selection in the annuity market with sequential and simultaneous insurance demand
Sprache des Titels:
This paper investigates the effect of adverse selection on the private annuity market in a model with two periods of retirement and two types of individuals, who differ in their life expectancy. In order to introduce the existence of time-limited pension insurance, we consider a model where for each period of retirement separate contracts can be purchased. Demand for the two periods can be decided sequentially or simultaneously. We show that only a situation where all risk types choose sequential contracts is an equilibrium and that this outcome is favourable for the long-living, but is unfavourable for the short-living individuals.