Switching Costs and Competition in Retirement Investment

• 成果类型: Article
• 署名作者: Luco, Fernando
• 署名单位: Texas A&M University System; Texas A&M University College Station
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20160332
• 发表日期: 2019
• 页码: 26-54
• 关键词: markets; inertia; CHOICE

摘要

How do different switching costs affect choices and competition in a private pension system? I answer this question in a setting in which variation in employment status allows me to identify two switching costs that jointly affect enrollees' decisions: the cost of evaluating financial information and the cost of the bureaucratic process that enrollees must navigate when switching. I use this variation to estimate the different switching costs and study their impact on competition among pension funds. I find that though eliminating all switching costs decreases equilibrium fees the most, eliminating either switching cost decreases fees significantly.