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An experimental test of the under-annuitization puzzle with smooth ambiguity and charitable giving

d’Albis, Hippolyte ; Attanasi, Giuseppe ; Thibault, Emmanuel

Journal of economic behavior & organization, 2020-12, Vol.180, p.694-717 [Periódico revisado por pares]

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Título:
An experimental test of the under-annuitization puzzle with smooth ambiguity and charitable giving
Autor: d’Albis, Hippolyte ; Attanasi, Giuseppe ; Thibault, Emmanuel
Assuntos: Annuity ; Charity ; Economics and Finance ; Experiment ; Humanities and Social Sciences ; Self-insurance ; Smooth ambiguity aversion ; Uncertain survival probabilities
É parte de: Journal of economic behavior & organization, 2020-12, Vol.180, p.694-717
Descrição: In a life-cycle model with a bequest motive, we study the impact of smooth ambiguity aversion to uncertain survival probabilities on the optimal demand for annuities. We implement a theory-driven laboratory experiment. First, a subject’s ambiguity attitude is elicited in a simple experimental setting able to make the smooth ambiguity model operational. Then, in a two-period annuity-bequest decision problem, the subject’s bequest in the second period is presented as a donation to a previously chosen charity, contingent to the subject being active after the first period. In line with the theoretical predictions, we find that ambiguity-averse (resp., loving) subjects invest less (resp., more) in annuities than ambiguity-neutral ones. Furthermore, subjects’ contingent donation to the chosen charity increases in their investment in annuities only for sufficiently high levels of warm-glow altruism.
Editor: Elsevier B.V
Idioma: Inglês

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