Switching Costs and Competition in Retirement Investment

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)

• Publication year

  2019

• Venue

  American Economic Journal: Microeconomics

• Publication date

  2019-05-01

• Fields of study

  Economics

• Identifiers
  DOI 10.1257/MIC.20160332
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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