Good news can involve difficult decisions. For example winning a lottery jackpot can go along with the decision, whether to have the jackpot paid out immediately as a lump sum or as periodic annual payments. Also when entering retirement most people face the decision whether they want their defined contribution account balance paid as a lump sum or to annuitize that amount. The fact that people tend to choose the lump sum even if economic reasons suggest that they should choose the annuity is called the annuity paradox. In a large online survey we find that people behave time inconsistent: older people have a stronger tendency to choose the lump sum than younger people when they are asked to predict today what to choose when they retire. This effect is considerably stronger for participants that answer simple time preference questions inconsistently. Our findings suggest to think about precommitment devices for the annuitization decision.

In a large online experiment, we relate the retirement timing decision to the disparity between the willingness-to-accept (WTA) and the willingness-to-pay (WTP). In the WTP treatment, participants indicate the maximum amount of monthly benefits they are willing to give up in order to retire early. In the WTA treatment, the minimum increase of monthly payments in order to delay retirement is elicited. Our results reveal that the framing of the decision problem strongly influences participants' reservation price for early retirement. The willingnessto-accept for early retirement is more than twice as high as the corresponding willingness-to-pay.Using actual values from the German social security system as market prices, we demonstrate that the presentation in a WTA frame can induce early retirement. In this frame, the implicit probability of retiring early increases by 30 percentage points. We further show that the disparity between WTA and WTP is correlated with loss aversion. Repeating the analysis with data from a representative household survey (German SAVE panel), we find similar results.

Good news can involve difficult decisions. For example winning a lottery jackpot can go along with the decision, whether to have the jackpot paid out immediately as a lump sum or as periodic annual payments. Also when entering retirement most people face the decision whether they want their defined contribution account balance paid as a lump sum or to annuitize that amount. The fact that people tend to choose the lump sum even if economic reasons suggest that they should choose the annuity is called the annuity paradox. In a large online survey we find that people behave time inconsistent: older people have a stronger tendency to choose the lump sum than younger people when they are asked to predict today what to choose when they retire. This effect is considerably stronger for participants that answer simple time preference questions inconsistently. Our findings suggest to think about precommitment devices for the annuitization decision.

Healthy banks are crucially important for smooth lending. Correspondingly, bank regulations including Basel III intend to create a strong financial sector. However, the higher capital requirements may also worsen the access to finance especially during the transition period. Using data on firm-bank relationships in Germany between 2005 and 2007, we show that the debt ratio of banks is related to the bank loan risk. In order to assess the potential effect of tighter capital requirements due to regulatory changes, we analyze industry specific responses of loan conditions to bank debt levels. Our findings imply that manufacturing, and to a lesser extent wholesale and retail trade, will potentially face a more restricted access to bank loans after the tightening of capital requirements.

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We study the effect of inconsistent time preferences on actual and planned retirement timing decisions in two independent datasets. Theory predicts that hyperbolic time preferences can lead to dynamically inconsistent retirement timing. In an online experiment with more than 2,000 participants, we find that timeinconsistent participants retire on average 1.75 years earlier than time-consistent participants do. The planned retirement age of non-retired participants decreases with age. This negative age effect is about twice as strong among time-inconsistent participants. The temptation of early retirement seems to rise in the final years of approaching retirement. Consequently, time-inconsistent participants have a higher probability of regretting their retirement decision. We find similar results for a representative household survey (German SAVE panel). Using smoking behavior and overdraft usage as time preference proxies, we confirm that timeinconsistent participants retire earlier and that non-retirees reduce their planned retirement age within the panel.

We focus on the determinants and potential benefits of relationship banking. Based on the existing literature and the unique role intangible assets play regarding firms'capital structure, we test two hypotheses using rich data on firm-bank relationships in Germany. We show that firstly, a high share of intangible assets does not worsen the access of firms to debt financing compared to matched firms with a low share of intangible assets. And secondly, firms' share of intangible assets statistically signicantly determines firms' choice of an exclusive and persistent bank relation.