In this article, we consider illiquid life annuity contracts and show that they may be preferred to Yaari (1965)’s liquid contracts. In an overlapping-generation economy, liquid life annuities are demanded only if the equilibrium is dynamically inefficient. Alternatively, an equilibrium...

In this article, we consider illiquid life annuity contracts and show that they may be preferred to those illustrated by Yaari (1965). In an overlapping-generation economy, liquid life annuities are demanded only if the equilibrium is dynamically inefficient. Conversely, an equilibrium...