We propose and estimate a model of demand and supply of annuities to study a privatized market for annuities . To this end, we use rich data from Chile, where annuities are sold via a two-stage process: first-price auctions followed by bargaining. Firms have private information about their costs , and retirees have heterogeneous preferences for bequest and  firms' risk rating . We find that retirees with low savings value firms ' risk ratings more than others, and approximately 40\% do not value bequests. Counterfactuals suggest that using simpler English auctions increases pensionsbut mainly for those in the top four savings deciles .
We propose and estimate a model of demand and supply of annuities to evaluate a privatized annuities market . To this end, we use rich data from Chile, where annuities are sold via a two-stage process: first-price auctions followed by bargaining. We model firms with private information about costs and retirees with different mortalities and preferences for bequests and firms' risk ratings . We find substantial costs and preference heterogeneity and that having many firms is crucial for good market outcomes. Counterfactuals show that simplifying the current mechanism with English auctions and "shutting down" risk ratings increase pensions, but only for high-savers .
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study a privatized market for annuities
evaluate a privatized annuities market
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Firms have
We model firms with
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their costs , and retirees have heterogeneous preferences for bequest
costs
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retirees with different mortalities and preferences for bequests and
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rating
ratings
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that retirees with low savings value firms ' risk ratings more than others, and approximately 40\% do not value bequests. Counterfactuals suggest that using simpler English auctions increases pensionsbut mainly for those in the top four savings deciles
substantial costs and preference heterogeneity and that having many firms is crucial for good market outcomes. Counterfactuals show that simplifying the current mechanism with English auctions and "shutting down" risk ratings increase pensions, but only for high-savers