This paper studies the problem of redistribution between individuals having different mortality rates. We use a continuous time model in which there are two types of individuals characterized by different survival probability paths. Individual preferences are represented by a generalized life cycle utility function which can exhibit temporal risk aversion. We successively compare utilitarian allocations when individuals exhibit temporal risk neutrality and temporal risk aversion. This problem is analyzed successively in the context of full information and asymmetric information on mortality rates.
- H55: Social Security and Public Pensions
- H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies
- I31: General Welfare, Well-Being
TSE Working Paper, n. 09-021, March 2009