Defined terms for the annuity market and lifetime income landscape.
The disposition effect is the empirical pattern in which investors sell assets that have gained in value more readily than assets that have lost value, holding losers in the hope of recovery and realizing gains too quickly.
Fear of outliving assets is the individual's anticipation of exhausting savings before death, expressed as a psychological weight on decisions about how to draw down retirement capital.
Framing effects are the pattern in which the choices individuals make depend on how the options are described or presented, so that the same underlying decision produces different selections when the framing changes.
Hyperbolic discounting is a pattern of time preference in which the rate at which individuals discount future outcomes declines as the delay grows longer, producing a stronger preference for the near term over the medium term than for the medium term over the far term.
Liquidity preference is the value an individual assigns to retaining direct access to and control over capital, which shapes the choice between arrangements that preserve capital access and those that convert capital into income.
