We study the effects on the macroeconomic equilibrium, the wealth distribution, and welfare of adverse selection in private annuity markets in a closed economy inhabited by overlapping generations of heterogeneous agents who are distinguished by their health status. If an agent’s health type...

We study the implications of adverse selection in annuity markets in a general-equilibrium model of the closed economy. Agents differ in their health type and invest their assets in the annuity market. Without informational asymmetries each agent would obtain an actuarially fair insurance. If...