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Pension Contributions as a Commitment device: evidence of sophistication among time-inconsistent households

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Author Info
Patricia Sourdin (The University of Adelaide)
Abstract

Sophisticated agents with self-control problems value commitment devices that constrain future choices. Using Australian household data, I test whether these households value commitment devices in the form of illiquid pension contributions. Applying various probabilistic choice models, the results confirm the conjecture that households with problems of self-control are more likely to invest in illiquid pensions while less likely to hold very liquid forms of assets.

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Paper provided by EconWPA in its series Public Economics with number 0512009.

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Date of creation: 12 Dec 2005
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Handle: RePEc:wpa:wuwppe:0512009

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Related research
Keywords: commitment device; pensions; intertemporal choice;

Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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