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

  • Patricia Sourdin

    (The University of Adelaide)

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    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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    File URL: http://econwpa.repec.org/eps/pe/papers/0512/0512009.pdf
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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
    Note: Type of Document - pdf
    Contact details of provider: Web page: http://econwpa.repec.org

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    2. Hochguertel, Stefan & Alessie, Rob & van Soest, Arthur, 1997. " Saving Accounts versus Stocks and Bonds in Household Portfolio Allocation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 81-97, March.
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    11. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 729-58, August.
    12. John Ameriks & Andrew Caplin & John Leahy, 2002. "Wealth Accumulation and the Propensity to Plan," NBER Working Papers 8920, National Bureau of Economic Research, Inc.
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    16. Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
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