Vol. 11 No. 22 (2016)

Artículos

Hotelling model applied to the AFORES in Mexico

Published 2016-01-04

  • Humberto Banda-Ortiz

Humberto Banda-Ortiz
Universidad Autónoma de Querétaro, Facultad de Contaduría y Administración

Abstract

The AFORES pension system in Mexico is quite new, that is why a high percentage of the population does not have this benefit and does not have the necessary information to maximize the amount of their pension when they will be retire. This work presents the applicability of the Hotelling Game Theory Model to the retirement savings system in Mexico. In order to do this, it is shown the worker’s utility function, which consists of calculating the excess of the net income per Administradora de Fondos para el Retiro (AFORE) with the performance of the index of prices and market rates of the Mexican Stock Exchange (IPC). The data used for this study was for the period of March 2009 to December 2015. Also, the existing 11 AFORES to date were compared. The results show wich AFORE would be chosen by a risk-averse worker, based on the relation risk-performance. Finally, we show the AFORES’demand to view if the decision-making by the workers in Mexico is based on the components presented.

Keywords

AFORES, game theory, hotelling, utility function

PDF (Spanish)

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