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Auctioning Annuities with Two Sided Private Information

Author

Listed:
  • Gabrielli Maria Florencia
  • Aryal Gaurab
  • Fajnzilber Eduardo
  • Willington Manuel

Abstract

We propose and estimate a model of demand and supply of annuities. To this end, we use rich data from Chile, where annuities are bought and sold in a private market via a two-stage process: rst-price auctions followed by bargaining. We model rms with private information about costs and retirees with di erent mortalities and preferences for bequests and rms' risk ratings. We nd substantial costs and preference heterogeneity, and because there are many rms, the market performs well. Counterfactuals show that simplifying the current mechanism with English auctions and\shutting down" risk ratings increase pensions, but only for high savers.

Suggested Citation

  • Gabrielli Maria Florencia & Aryal Gaurab & Fajnzilber Eduardo & Willington Manuel, 2025. "Auctioning Annuities with Two Sided Private Information," Asociación Argentina de Economía Política: Working Papers 4804, Asociación Argentina de Economía Política.
    • Handle: RePEc:aep:anales:4804
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    References listed on IDEAS

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    1. Brown, Jeffrey R. & Mitchell, Olivia S. & Poterba, James M. & Warshawsky, Mark J., 2001. "The Role of Annuity Markets in Financing Retirement," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262529130, December.
    2. Mitchell, Olivia S. & Shea, Richard C. (ed.), 2016. "Reimagining Pensions: The Next 40 Years," OUP Catalogue, Oxford University Press, number 9780198755449.
    3. Theo Offerman, 2002. "Efficiency in Auctions with Private and Common Values: An Experimental Study," American Economic Review, American Economic Association, vol. 92(3), pages 625-643, June.
    4. Justine Hastings & Ali Hortaçsu & Chad Syverson, 2017. "Sales Force and Competition in Financial Product Markets: The Case of Mexico's Social Security Privatization," Econometrica, Econometric Society, vol. 85(6), pages 1723-1761, November.
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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