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

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  • Patricia Sourdin

    (The 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 Contributions as a Commitment device: evidence of sophistication among time-inconsistent households," Public Economics 0512009, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0512009
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    References listed on IDEAS

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    More about this item

    Keywords

    commitment device; pensions; intertemporal choice;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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