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Friday, May 18 • 10:45am - 12:15pm
B2a-Annuity Puzzle and Loss Aversion of Older Consumers: Theoretical and Empirical Evaluations

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Namhoon Kim, Travis P. Mountain - The purpose of this study is to investigate the role of loss aversion in determining the annuity ownership with sparse outcome data. We examined the hypothesis that high loss aversion would decrease the annuity ownership theoretically and empirically. Furthermore, we examined the hypothesis that the annuity ownership decision depends on the type of risk aversion. In addition, we employed several econometric models that deal with the small sample bias that resulted from the rare ownership of annuities. Our theoretical and empirical evidence showed that the high loss aversion reduces the annuity ownership. We also argued that cognitive misunderstanding of the annuity as a risky investment induced the low annuity ownership.

avatar for Namhoon Kim

Namhoon Kim

PhD / Research Assistant, Virginia Tech

Friday May 18, 2018 10:45am - 12:15pm

Attendees (2)