Options, Not Returns: Overcoming the Annuity Paradox
Although annuities insure people against outliving their money, few Americans purchase them. Two studies show that consumers prefer annuities that make less economic sense (annuities with a guaranteed minimum term or cash-back options), even if they give up returns. Individual differences in time and risk preferences also predict annuity preferences.
Kirstin Appelt and Eric Johnson (2011) ,"Options, Not Returns: Overcoming the Annuity Paradox", in NA - Advances in Consumer Research Volume 39, eds. Rohini Ahluwalia, Tanya L. Chartrand, and Rebecca K. Ratner, Duluth, MN : Association for Consumer Research, Pages: 211-212.
Kirstin Appelt, Columbia University, USA
Eric Johnson, Columbia University, USA
NA - Advances in Consumer Research Volume 39 | 2011
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