Can Transparency Increase Adverse Selection? Evidence from an Electronic Platform for Annuities

In this letter we show evidence that the introduction of an electronic platform in the Chilean annuity market in 2004 exacerbated adverse selection. Male annuitants who retired after 2004 live around two years longer than non-annuitants, while before the difference was smaller or non statistically significant. Moreover, the fraction of annuitants decreased despite the fact that the deals offered by insurance companies improved. These two facts are consistent with the electronic platform bringing transparency, competition, and reducing the scope for sales agents to affect retirees' choices