Switching Costs and Competition in Retirement Investment Academic Article uri icon

abstract

  • 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. JEL (D14, G23, J26, J32, O15)

published proceedings

  • AMERICAN ECONOMIC JOURNAL-MICROECONOMICS

altmetric score

  • 7.4

author list (cited authors)

  • Luco, F.

citation count

  • 22

complete list of authors

  • Luco, Fernando

publication date

  • May 2019