Attanasi, Giuseppe Marco, D'Albis, Hippolyte and Thibault, Emmanuel (2020) An experimental test of the under-annuitization puzzle with smooth ambiguity and charitable giving. Journal of Economic Behavior and Organization, vol. 180. pp. 694-717.

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Identification Number : 10.1016/j.jebo.2019.09.019


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.

Item Type: Article
Language: English
Date: December 2020
Refereed: Yes
Place of Publication: Amsterdam.
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 26 Sep 2019 09:34
Last Modified: 01 Dec 2021 02:00
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