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Income variability and selection of the pension system
Author(s) -
Öztürk Göktuna Bilge
Publication year - 2019
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3000
Subject(s) - pension , economics , volatility (finance) , subsistence agriculture , population , selection (genetic algorithm) , scheme (mathematics) , microeconomics , econometrics , actuarial science , computer science , finance , mathematics , biology , ecology , mathematical analysis , demography , artificial intelligence , sociology , agriculture
This paper provides a simple two‐period, game theoretic set‐up with heterogeneous agents to analyse individual selection of a pension scheme by different categories of agents. Agents have been differentiated according to their income variability. We describe Bayesian equilibria and provide examples to illustrate. The design of a pension scheme requires the consent of all the population, and we have shown that differences of volatility of income contribute to the divergence regarding the decision of a pension investment alternative. We also provide support for the subsistence of unfunded scheme in economies with demographic aging and with promising returns in funded alternatives.