aktuelle Publikationen (ab 2015)

When irrelevant alternatives do matter. The effect of focusing on loan decisions.

Author(s)
Barna Bakó, Gábor Neszveda, Linda Dezsö
Abstract

In this paper, we investigate some implications of recent results about salience on loan decisions. Using the framework of focus-weighted utility we show that consumers might take out loans even when that yield them negative utility due to the focusing bias. We suggest, however, that this can be counterbalanced and consumers might be more prudent in their decisions and less likely to take out such loans when the usual fixed-installments plan is coupled with an equivalent decreasing-installments option. Moreover, we show that this is true even for loans with prepayment options or when borrowers take default into consideration. We argue that harmful loan consumption could be decreased if a policy would prescribe presentation of loan repayment schedules in a way that employs this effect.

Organisation(s)
Department of Occupational, Economic and Social Psychology
External organisation(s)
Tilburg University, Corvinus University of Budapest
Journal
Theory and Decision
Volume
84
Pages
123-141
No. of pages
19
ISSN
0040-5833
DOI
https://doi.org/10.1007/s11238-017-9641-9
Publication date
01-2018
Peer reviewed
Yes
Austrian Fields of Science 2012
502025 Econometrics, 502021 Microeconomics, 501029 Economic psychology
Keywords
ASJC Scopus subject areas
Social Sciences(all), Economics, Econometrics and Finance(all), Developmental and Educational Psychology, Arts and Humanities (miscellaneous), Decision Sciences(all), Applied Psychology, Computer Science Applications
Portal url
https://ucris.univie.ac.at/portal/en/publications/when-irrelevant-alternatives-do-matter-the-effect-of-focusing-on-loan-decisions(12a754c5-12bd-4bf4-a5b9-ad96e4a4c105).html