|
Consumer credit with over-optimistic borrowers
Exler, Florian
;
Livshits, Igor
;
MacGee, James
;
Tertilt, Michèle
|
URN:
|
urn:nbn:de:bsz:180-madoc-638854
|
|
Dokumenttyp:
|
Arbeitspapier
|
|
Erscheinungsjahr:
|
2022
|
|
Ort der Veröffentlichung:
|
Wien ; Mannheim [u.a.]
|
|
Sprache der Veröffentlichung:
|
Englisch
|
|
Einrichtung:
|
Fakultät für Rechtswissenschaft und Volkswirtschaftslehre > Makro- u. Entwicklungsökonomie (Tertilt 2010-)
|
|
Fachgebiet:
|
330 Wirtschaft
|
|
Fachklassifikation:
|
JEL:
E21 , E49 , G18 , K35,
|
|
Freie Schlagwörter (Englisch):
|
consumer credit , over-optimism , financial mistakes , bankruptcy , default , financial literacy , financial regulation , type score , cross-subsidization
|
|
Abstract:
|
We quantitatively analyze consumer credit markets with behavioral consumersand default. Our model incorporates over-optimistic and rational borrower typesinto a standard incomplete markets with consumer bankruptcy framework. Lendersprice credit endogenously, forming beliefs – type scores – about borrowers’ types.Since over-optimistic borrowers incorrectly believe they have rational beliefs, lendersdo not need to take strategic behavior into account when updating type scores. Wefind that the partial pooling of over-optimistic with rational borrowers results inspill-overs across types via interest rates, with over-optimists being cross-subsidizedby rational consumers who have lower default rates. Higher interest rates lower theaverage debt level of realists compared to a world without over-optimists. Due tooverestimating their ability to repay, over-optimists borrow too much. We evaluatethree policies to address these frictions: reducing the cost of default, educating over-optimists about their true type, and increasing borrowing cost. Of the three, onlythe lower default costs improve the welfare of over-optimists. However, rationalconsumers are made worse off by that policy.
|
 | Dieser Eintrag ist Teil der Universitätsbibliographie. |
 | Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt. |
 Suche Autoren in
BASE:
Exler, Florian
;
Livshits, Igor
;
MacGee, James
;
Tertilt, Michèle
Google Scholar:
Exler, Florian
;
Livshits, Igor
;
MacGee, James
;
Tertilt, Michèle
ORCID:
Exler, Florian ; Livshits, Igor ; MacGee, James ; Tertilt, Michèle  ORCID: 0000-0003-0605-4141
Sie haben einen Fehler gefunden? Teilen Sie uns Ihren Korrekturwunsch bitte hier mit: E-Mail
Actions (login required)
 |
Eintrag anzeigen |
|
|
![[img]](https://madoc.bib.uni-mannheim.de/style/images/fileicons/application_pdf.png)