The Economic Theory of Annuities 10 pptx

... tends to mitigate the effects of adverse selection because, when bundled, the negative correlation between the costs of these products reduces the overall variation of the costs of the bundle with individual ... y, (14.24) where a is the amount of annuities, z is expected lifetime, b is the amount of life insurance (=bequests), and y is the amount of the num...

Ngày tải lên: 21/06/2014, 07:20

... description of the motivation for and the stipulations of these annuities from a textbook for actuaries: These are usually effected to avoid the disappointment that is often felt in the event of the ... to make the price of period- certain annuities commensurate with the price of regular annuities. These annuities are available in the United Kingdom, where th...

Ngày tải lên: 21/06/2014, 07:20

... < T. The pooling rate of return on annuities, reflecting adverse selection in the purchase of annuities in equilibrium, is lower than the rate of return on annuities purchased prior to the realization ... for any length of time and that their future stream of returns is fully specified at the time of purchase or sale. We continue to denote the annuities held b...

Ngày tải lên: 21/06/2014, 07:20

... (4.4). When there is a positive rate of interest on assets, the competitive rate of return on annuities is equal to the rate of interest plus the hazard rate. The reason is obvious: The issuers of annuities ... expectancy of the owners. The other risk class experiences a loss for the opposite reason. Another important implication of the fact that in equilibri...

Ngày tải lên: 21/06/2014, 07:20

... total consumption in the second period. The second term is the sum of the expected utilities of two surviving individuals, while the third is the expected utility of one survivor. The budget constraint ... age, its rate of decline being equal to the product of the inverse of the coefficient of relative risk aversion and the hazard rate. Optimum retirement ag...

Ngày tải lên: 21/06/2014, 07:20

... accross states of nature). Sequential annuity market equilibrium is characterized by the purchase of long-term annuities, short sale of some of these annuities later on, or the purchase of additional short-term ... longevity risk. Further, to respond to the desire of individuals for flexibility, the model should allow for short sales of annuities purchased early or...

Ngày tải lên: 21/06/2014, 07:20

... Exponential Survival Function 102 12.5 No Annuities 103 12.6 Unintended Bequests 104 Appendix 106 Chapter 13 Utilitarian Pricing of Annuities 109 13.1 First-best Allocation 109 13.2 Competitive Annuity ... acid-free paper. ∞ press.princeton.edu Printed in the United States of America 109 87654321 iv August 22, 2007 Time: 09:47am prelims.tex The Economic Theory of...

Ngày tải lên: 20/06/2014, 20:20

... tends to mitigate the effects of adverse selection because, when bundled, the negative correlation between the costs of these products reduces the overall variation of the costs of the bundle with individual ... y, (14.24) where a is the amount of annuities, z is expected lifetime, b is the amount of life insurance (=bequests), and y is the amount of the num...

Ngày tải lên: 20/06/2014, 20:20

... on the economics of incomplete information. Quarterly Journal of Economics 90: 624–649. Salanie, B. 2000. Microeconomics of Market Failure. Cambridge, MA: MIT Press. Salanie, B. 2003. The Economics ... Prentice Hall. Rabin, M. 1998. Psychology and economics. Journal of Economic Literature 36: 11–46. Ramsey, F. P. 1927. A contribution to the theory of taxation. Economic J...

Ngày tải lên: 20/06/2014, 20:20

... accross states of nature). Sequential annuity market equilibrium is characterized by the purchase of long-term annuities, short sale of some of these annuities later on, or the purchase of additional short-term ... variety of refundable annuities. Type r i ≥ 0 annuities are annuities that each guar- antee a refund of r i when presented by the holder in period 1. Th...

Ngày tải lên: 21/06/2014, 00:20