Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311908 
Year of Publication: 
2023
Citation: 
[Journal:] Decisions in Economics and Finance [ISSN:] 1129-6569 [Publisher:] Springer International Publishing [Place:] Cham [Year:] 2023 [Pages:] 1-23
Publisher: 
Springer International Publishing, Cham
Abstract: 
Actuarial fairness pertains to the situation in which the price of an insurance contract is equal to its expected outcome. We show that actuarial fairness leads to "unfairness" in that annuitants with higher survival rates can choose a better payoff in the sense of second-order stochastic dominance than those with lower survival rates. To deal with this issue, we propose equal utility pricing, i.e., we determine prices such that all contracts have the same (nonlinear) utility from the viewpoint of a third party (e.g., a social planner). This approach is of particular relevance with respect to the design of group self-annuitization schemes.
Subjects: 
Fairness
Actuarial pricing
Financial pricing
Equal utility
JEL: 
G22
J32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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