The role of guarantees in pension plan design: Pension saving decisions

This study centers on the assessment of psychological value of guarantees in pension products and the behavior biases associated with choice. When a guarantee on a product increases from 99% to 99,5% less than half of respondents show willingness to pay in contrast with 73% when going from 99,5% to 100%. Out of 105 respondents, 55 show that their choices concerning pension products are inconsistent with classic utility theory. Financial background proves insignificant thus pointing to behavioral biases. As individuals make choices that leave them worse-off, we argue that pension plan design would highly benefit from public policy interventions.

Financial protection in the UK building industry: bonds, retentions and guarantees

Financial Protection in the UK Building Industry provides comprehensive treatment of a complex aspect of construction management which is increasingly important in modern construction contracts. The term 'Financial Protection' refers to refers to the various mechanisms by which funds are made available to ensure the due performance of a partys contractual obligations. This book is based on material written for a research project funded by the Reading Construction Forum. Financial Protection in the UK Building Industry looks at the legal and economic background to the problem of providing financial protection to clients to guard against poor performance and or the insolvency of contractors, consultants and sub-contractors. The inclusion of practical guidance notes and summaries makes this a valuable guide for the construction professional as well as for the researcher. * provides in-depth analysis of financial protection measures * explores the ways in which financial protection can increase efficiency in the industry * financial protection in construction is beset with problems - this book points toward practical solutions

Experimental duopolies under price guarantees

In a symmetric differentiated experimental duopoly we test the ability of Price Guarantees (PGs) to raise prices above the competitive levels. Different types of PGs (‘aggressive’ and ‘soft’ price-beating and price-matching) are implemented either as an exogenously imposed market rule or as a business strategy. Our results show that PGs may lead close to the collusive outcome, depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the ‘aggressive’ price-beating type.

Pro-competitive price beating guarantees: experimental evidence

We report experimental results on duopoly pricing with and without price beating guarantees (PBG). In two control treatments, price beating is either imposed as an industry-wide rule or offered as a business strategy. Our major finding is that when price beating guarantees are imposed as a rule or offered as an option, effective prices are equal to or lower than those in a baseline treatment in which price beating is forbidden. Also, when price beating is treated as a business strategy, less than 50% of subjects adopted the guarantee, suggesting that, subjects realize the pro-competitive effects of the guarantee.

Unconditional transfers goes to health? Evidence from Brazilian municipalities

This study assesses the impact of unconditional transfer resources on the health indicators of Brazilian municipalities. This transfer refers to the Participation Fund of Municipalities (FPM) where at least 15% of its value should be spent on public health. Based on a discontinuity of the rules of transfers, we explore Regression Discontinuous Design for the years 2002 to 2010, and find: (i) no significant effect of FPM on mortality reduction; (ii) a robust and significant reduction in morbidity, treated municipalities – on the right side of thresholds – on average have a per capita rate of morbidity 0.00821% lower than those on the left side of the cutoff points; (iii) the mechanisms through which a reduction on morbidity could be operated would be due to estimated increases in preventive measures such as consultations and medical and nurses visits, these were bigger for the treated group in, respectively, 0.32%, 0.038% and 0.039%.

Financial guarantees in Brazilian life insurance and pension plans

Recently regulated Brazilian life and pension products offer a benefit structure composed of minimum guaranteed annual rate, in°ation adjustment according to a price index and participation on an investment fund performance. We present a valuation model for these products. We establish a fair condition relationship between minimum guarantees and participation rates, and explore its behavior over a space of maturities, interest rates, and also fund and price index volatilities and correlation. Besides consistency to reference models, we found that the effect of the fund volatility is conditioned to the price index volatility level and the correlation between them.