Investor Behavior and Fund Performance under a Privatized Retirement Accounts System: Evidence from Chile

In the U.S. and in Chile, there have been heated debates about the relative merits of a decentralized privatized pension system relative to a more traditional social security system. On the firm side, there are concerns that pension funds engage in anticompetitive behavior and take advantage of consumers’ by charging high fees and account maintenance changes. On the consumer side, there are concerns that consumers do not select wisely among funds and take on too much risk. Any pension system with insurance features to protect against low levels of pension accumulations is potentially subject to moral hazard problems, in the form of consumers’ taking on too much risk. In the case of Chile, the government provides a minimum pension benefit to those with low pension accumulations, which can make some consumers more willing to take risks. For these reasons, the Chilean government introduced regulations on pension fund firms’ investments designed to limit risk. This paper analyzes the determinants of consumers’ choices of pension fund and of pension fund characteristics (performance and fees), taking into account governmental regulations. In particular, it estimates a demand and supply model of the pension fund investment market using a longitudinal household dataset gathered in 2002 and 2004 in Chile, administrative data on fund choices, and longitudinal data on cost determinants of pension funds. We find that the existing regulation actually increases the level of risk in the market, reduces heterogeneity across firms, and reduces incentives for consumers to participate in the pension fund program. We suggest alternative more effective forms of regulation.

Comparing Auction Formats

In many procurement settings a buyer uses auction as a price finding and allocation mechanism. This is convenient because the costs often vary across providers and are unknown to the buyer (are private). In such situation an auction may be used to minimize price a buyer has to pay. On the other hand a buyer often cares about other characteristics of service in addition to price. For example, a buyer may care about the overall level of quality (providers' expertise and diligence). Historically, several ways of addressing such concerns have been developed by procurement markets. In US public procurement, potential providers undergo certification process which ensures satisfactory level of quality for those providers who are allowed to participate in auction. After that the provider is chosen through a standard auction mechanism (a first price or a second-price auction). In contrast, private industry prefers to use so called multi-attribute auctions where a buyer has an opportunity to form an impression about the quality of providers who decided to participate in the auction and and may subsequently freely choose among participants according to his private preference for the combination of quality and price. In this paper we compare performance of these two classes of mechanisms

Identification and Estimation of Auction Model with Two-Dimensional Unobserved Heterogeneity

This paper investigates the empirical importance of allowing for multi-dimensional sources of unobserved heterogeneity in auction models with private information. It in turn develops the estimation procedure that recovers the distribution of private information in the presence of two distinct sources of unobserved heterogeneity. It is shown that this estimation procedure identifies components of the model and produces uniformly consistent estimators of these components. The estimation procedure is applied to the data from highway procurement. The results of the estimation indicate that allowing for two-dimensional unobserved heterogeneity may significantly affect the results of estimation as well as policy-relevant instruments derived from the estimated distributions of bidders’ costs.unobserved auction heterogeneity, procurement auctions, reserve price

Bid Preference Programs and Participation in Highway Procurement Auctions

We use data from highway procurement auction subject to California\u27s Small Business Preference program to study the effect of bid preferences on auction outcomes. Our analysis is based on an estimated model of firms\u27 bidding and participation decisions, which allows us to evaluate the effects of current and alternative policy designs. We show that incorporating participation responses siginificantly alters the assessment of preferential treatment policies

Investor Behavior and Fund Performance under a Privatized Retirement Accounts System: Evidence from Chile

In the U.S. and in Chile, there have been heated debates about the relative merits of a decentralized privatized pension system relative to a more traditional social security system. On the firm side, there are concerns that pension funds engage in anticompetitive behavior and take advantage of consumers’ by charging high fees and account maintenance changes. On the consumer side, there are concerns that consumers do not select wisely among funds and take on too much risk. Any pension system with insurance features to protect against low levels of pension accumulations is potentially subject to moral hazard problems, in the form of consumers’ taking on too much risk. In the case of Chile, the government provides a minimum pension benefit to those with low pension accumulations, which can make some consumers more willing to take risks. For these reasons, the Chilean government introduced regulations on pension fund firms’ investments designed to limit risk. This paper analyzes the determinants of consumers’ choices of pension fund and of pension fund characteristics (performance and fees), taking into account governmental regulations. In particular, it estimates a demand and supply model of the pension fund investment market using a longitudinal household dataset gathered in 2002 and 2004 in Chile, administrative data on fund choices, and longitudinal data on cost determinants of pension funds. We find that the existing regulation actually increases the level of risk in the market, reduces heterogeneity across firms, and reduces incentives for consumers to participate in the pension fund program. We suggest alternative more effective forms of regulation.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/64463/1/wp209.pd

Comparing Auction Formats

In many procurement settings a buyer uses auction as a price finding and allocation mechanism. This is convenient because the costs often vary across providers and are unknown to the buyer (are private). In such situation an auction may be used to minimize price a buyer has to pay. On the other hand a buyer often cares about other characteristics of service in addition to price. For example, a buyer may care about the overall level of quality (providers' expertise and diligence). Historically, several ways of addressing such concerns have been developed by procurement markets. In US public procurement, potential providers undergo certification process which ensures satisfactory level of quality for those providers who are allowed to participate in auction. After that the provider is chosen through a standard auction mechanism (a first price or a second-price auction). In contrast, private industry prefers to use so called multi-attribute auctions where a buyer has an opportunity to form an impression about the quality of providers who decided to participate in the auction and and may subsequently freely choose among participants according to his private preference for the combination of quality and price. In this paper we compare performance of these two classes of mechanisms

Organic chemistry. History and mutual relations of universities of Russia

© 2017, Pleiades Publishing, Ltd. The review describes the history of development of organic chemistry in higher schools of Russia over a period of 170 years, since the emergence of organic chemistry in our country till now