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Allowance of zero investments or zero share allocations

Investigate the modeling and fairness implications of permitting πi = 0 (zero investment) and/or fi = 0 (zero share allocation) for some participants in the one-period tontine fund, including mechanisms that allow certain demographic groups to avoid paying while still benefiting or to pay without benefiting.

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Background

The core model assumes strictly positive investments and shares for all participants, which simplifies payout and fairness analysis. The authors propose examining cases where some participants have zero investments or zero shares.

Such scenarios could represent targeted demographic policies (e.g., for younger or older groups) and require careful treatment of payout rules, fairness, and self-financing conditions, which the authors explicitly leave for future research.

References

In the same category of plans for future research, we leave the discussion of allowing πiand even f ti equal zero, allowing certain groups to avoid paying (and still benefiting) or not benefiting (and still paying.) Examples would be targetted demographic groups such as the young and old respectively.

— 'Egalitarian pooling and sharing of longevity risk', a.k.a. 'The many ways to skin a tontine cat' (2402.00855 - Dhaene et al., 1 Feb 2024) in Section 7 (Summary and Conclusion)