[ View menu ]

Daily Archive March 21st, 2014

The annuity or the lump sum?

Filed in Articles ,Research News
Subscribe to Decision Science News by Email (one email per week, easy unsubscribe)

If you take a light gloss over the literature, you would think that people are overly attracted to the lump sum, that is, they discount the future too much. One recent paper, however, finds that the appeal of the annuity has much to do with the amount. Small annuity payments are quite unattractive, but large annuity payments become surprisingly attractive.