Pension Contributions as a Commitment device: evidence of sophistication among time-inconsistent households
AbstractSophisticated 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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Date of creation: 12 Dec 2005
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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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-20 (All new papers)
- NEP-DCM-2005-12-20 (Discrete Choice Models)
- NEP-MAC-2005-12-20 (Macroeconomics)
- NEP-PBE-2005-12-20 (Public Economics)
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