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Pension Contribution as a Commitment Device: Evidence of Sophistication among Time-inconsistent Households

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  • Patricia Sourdin

    (School of Economics, 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 Contribution as a Commitment Device: Evidence of Sophistication among Time-inconsistent Households," School of Economics and Public Policy Working Papers 2005-17, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2005-17
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp2005-17.pdf
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    References listed on IDEAS

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    Cited by:

    1. Schunk, Daniel, 2007. "What determines the saving behavior of German households? : an examination of saving motives and saving decisions," Papers 07-10, Sonderforschungsbreich 504.

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