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Pension Contribution as a Commitment Device: Evidence of Sophistication among Time-inconsistent Households

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  • Patricia Sourdin

    (School of Economics, 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.

Suggested Citation

  • Patricia Sourdin, 2005. "Pension Contribution as a Commitment Device: Evidence of Sophistication among Time-inconsistent Households," School of Economics and Public Policy Working Papers 2005-17, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2005-17
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp2005-17.pdf
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    References listed on IDEAS

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    1. Daniel Schunk, 2007. "What Determines the Saving Behavior of German Households? An Examination of Saving Motives and Saving Decisions," MEA discussion paper series 07124, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.

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