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Disclosures, Nudges and Consumer Rationality in Mortgage Choice


  • Researchers:
    • Michael King and Anuj Singh

  • Partners:
    • Trinity College Dublin

  • Location:
    • Ireland

  • Sample:
    • 3,000 adults

  • Timeline:
    • 2018-2019

  • Theme:
    • Consumer Protection and Behavioural Finance

  • Description:
    • Financial products with a cashback feature typically cost consumers more in the long run, but their popularity is rising in the mortgage and credit markets. Using a nationally representative online sample in Ireland, this paper finds that consumers who are younger, less educated, suffer from present bias, and are inattentive are more likely to choose costly cash back mortgages. Further, the experiment provides strong evidence that advanced disclosure improves financial decision making of customers and that negative nudges, or advertising, encourages prospective buyers into more costly mortgages