Journal articles
Year
2014
Authors
KARAPETYAN Artashes, ALMENBERG Johan
Abstract
We report evidence that salience may have economically significant effects on homeowners’ borrowing behavior, through a bias in favour of less salient but more costly loans. Survey evidence corroborates the existence of such a bias. We outline a simple model in which some consumers are biased and show that under plausible assumptions this affects prices in equilibrium. Market data support the predictions of the model.
KARAPETYAN, A. et ALMENBERG, J. (2014). Hidden Costs of Hidden Debt. Review of Finance (ex European Finance Review), 18(6), pp. 2247-2281.