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An experimental test of the under-annuitization puzzle with smooth ambiguity and charitable giving

Author

Listed:
  • Hippolyte d'Albis

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Giuseppe Attanasi

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Emmanuel Thibault

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

In a life-cycle model with a bequest motive, we study the impact of smooth ambiguity aversion to uncertain survival probabilities on the optimal demand for annuities. We implement a theory-driven laboratory experiment. First, a subject's ambiguity attitude is elicited in a simple experimental setting able to make the smooth ambiguity model operational. Then, in a two-period annuity-bequest decision problem, the subject's bequest in the second period is presented as a donation to a previously chosen charity, contingent to the subject being active after the first period. In line with the theoretical predictions, we find that ambiguity-averse (resp., loving) subjects invest less (resp., more) in annuities than ambiguity-neutral ones. Furthermore, subjects' contingent donation to the chosen charity increases in their investment in annuities only for sufficiently high levels of warm-glow altruism.

Suggested Citation

  • Hippolyte d'Albis & Giuseppe Attanasi & Emmanuel Thibault, 2020. "An experimental test of the under-annuitization puzzle with smooth ambiguity and charitable giving," Post-Print halshs-02398675, HAL.
    • Handle: RePEc:hal:journl:halshs-02398675
    DOI: 10.1016/j.jebo.2019.09.019
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    Citations

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    Cited by:

    1. Morone, Andrea & Caferra, Rocco, 2024. "The Ambiguity Box: A new tool to generate ambiguity in the lab," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 113(C).
    2. Hwang, In Do, 2024. "Behavioral aspects of household portfolio choice: Effects of loss aversion on life insurance uptake and savings," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1029-1053.
    3. Florian Baumann & Tim Friehe & Pascal Langenbach, 2020. "Fines versus Damages: Experimental Evidence on Care Investments," Discussion Paper Series of the Max Planck Institute for Behavioral Economics 2020_08, Max Planck Institute for Behavioral Economics, revised Mar 2024.
    4. Giuseppe Attanasi & Kene Boun My & Nikolaos Georgantzís & Miguel Ginés, 2019. "Strategic Ethics: Altruism without the Other-Regarding Confound," Revue économique, Presses de Sciences-Po, vol. 70(6), pages 967-998.
    5. Giuseppe Attanasi & Ylenia Curci & Patrick Llerena & Giulia Urso, 2019. "Intrinsic vs. extrinsic motivators on creative collaboration: The effect of sharing rewards," Working Papers of BETA 2019-37, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    6. Milos Borozan & Loreta Cannito & Barbara Luppi, 2022. "A tale of two ambiguities: A conceptual overview of findings from economics and psychology," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 6(S1), pages 11-21, July.
    7. Brunette, Marielle & Couture, Stéphane & Boun My, Kene, 2025. "Probabilistic ambiguity, outcome ambiguity or both: Does it matter for the decision-maker?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 117(C).
    8. My, Kene Boun & Brunette, Marielle & Couture, Stéphane & Van Driessche, Sarah, 2024. "Are ambiguity preferences aligned with risk preferences?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 111(C).
    9. Zeng, Jingjing & Li, Zheng & Hensher, David A., 2025. "Travel decision making under uncertainty and road traffic behavior: The multifold role of ambiguity attitude," Transportation Research Part A: Policy and Practice, Elsevier, vol. 192(C).
    10. repec:beh:jbepv1:v:7:y:2023:i:2:p:39-46 is not listed on IDEAS

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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