Selected Working Papers

4. "Subjective Survival Beliefs, Financial Flexibility, and Retirement (Mis)planning" working paper

This paper studies how subjective survival beliefs translate into retirement behavior and welfare, and whether a given belief distortion has different consequences depending on households’ financial flexibility. I develop a post-retirement consumption-saving model in which retirees re-optimize after belief updates, subject to wealth-dependent constraints. The model highlights a financial-flexibility mechanism: belief revisions have more scope to affect behavior when households can adjust consumption, saving, and asset drawdown, while adjustment is muted for constrained retirees. Using Health and Retirement Study panel data, I find that the association between lagged belief bias and wealth dynamics is stronger among high-wealth households. A calibrated welfare exercise shows that interquartile optimistic and pessimistic survival-belief distortions generate modest but increasing consumption-equivalent losses along the wealth distribution. The results show that the welfare relevance of belief distortions depends not only on accuracy, but also on households’ capacity to act on them.

3. "When Promises Come Due: Refund Timing and Default Risk in Continuing Care Retirement Communities" working paper

Refundable entrance-fee contracts in continuing care retirement communities allocate risk between residents and providers. The stated refund percentage sets the size of the promise, but it does not by itself resolve when the refund will be paid or whether the provider will have sufficient resources when the claim matures. This paper studies that problem using a stylized stochastic model, and the results highlight a tradeoff that is not visible from the refund percentage alone. Replacement-contingent timing reduces maturity mismatch by linking payment to a new entrance-fee inflow, but it can still fail under severe market and liquidity stress when unrestricted assets face losses and liquidation haircuts. Reserve policies improve refund-payment performance by shifting proceeds to safe liquid backing, while provider-value-neutral pricing can shift part of that cost to residents. By linking refund timing, reserve policy, refund-payment default risk, provider-value-neutral fee adjustments, and resident recovery, the paper provides a framework for explaining how refund-payment disputes can arise even when the nominal refund percentage is clear, and for evaluating policy designs that make refundable entrance-fee promises more reliable.

2. "Ambiguity Aversion and State-Dependent Insurances" (with Yuanying Guan) working paper

It has been established that ambiguity aversion increases the optimal demand of (self)-insurance due to the resulting mean-preserving contraction in the distribution of expected utility. We extend the existing framework by further permitting the insurance indemnities to vary based on realized states of the world. We show that ambiguity-averse agents will always strictly prefer state-dependent insurances over ones with fixed indemnities. Our results also hold when the underlying states cannot be directly observed, but are partially correlated with some observable indicators based on which indemnities are contingent.

1. "On the Economics of Life Settlements" (with Daniel Bauer)

Life settlements provide the possibility for individuals to convert their life insurance policies into cash in a secondary market transaction. Hence, this additional option is welcome from current policyholders’ point of view, but the reasons for the attractiveness to financial investors as well as the equilibrium impacts on life insurers and future policyholders are not immediately clear.

This paper presents a model to analyze and explain the details of life settlement transactions. Moreover, we investigate the potential welfare effects of a secondary life insurance market. One of our key findings is that although a perfect market for life settlements could be welfare-enhancing, high fixed costs prevailing in these transactions may alleviate or even invert this effect.