Optimal Tactics in Community Pension Model for Defined Benefit Pension Plans
Author Information
Author(s): Wang Jun, Cui Chunli, Tian Tian
Primary Institution: School of Mathematics & Statistic, Changchun University of Technology, Changchun, China
Hypothesis
This study investigates the equilibrium strategy within a defined benefit pension plan using a community pension model.
Conclusion
The study finds that increasing risk aversion leads to a higher investment proportion by companies while decreasing the community pension allocation.
Supporting Evidence
- The study derives the Markov Perfect Nash Equilibrium solution for the pension model.
- Numerical simulations show how varying risk aversion affects investment strategies.
- The findings highlight the importance of balancing company investments and community pension allocations.
Takeaway
This study looks at how companies manage pension funds and community pensions, showing that when companies are more cautious, they invest more in safe options and less in community pensions.
Methodology
The study uses a stochastic differential game model to analyze the dynamics of defined benefit pensions with community pension elements.
Limitations
The study's focus on deterministic functions may limit its applicability to more complex scenarios.
Digital Object Identifier (DOI)
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