The Hidden Role of Contract Terms: The Case of Credit Card Minimum Payments in Mexico

References

• Abadie A, Chingos MM, West MR (2018) Endogenous stratification in randomized experiments. Rev. Econom. Statist. 100(4):567–580.Crossref, Google Scholar
• Adams P, Guttman-Kenney B, Hayes L, Hunt S, Stewart N (2018) Increasing credit card payments using choice architecture: The case of anchors and prompts. FCA Occasional Paper No. 42, Financial Conduct Authority, London.Google Scholar
• Agarwal S, Mazumder B (2013) Cognitive abilities and household financial decision making. Amer. Econom. J. Appl. Econom. 5(1):193–207.Crossref, Google Scholar
• Agarwal S, Chomsisengphet S, Liu C, Souleles NS (2015a) Do consumers choose the right credit contracts? Rev. Corporate Finance Stud. 4(2):239–257.Crossref, Google Scholar
• Agarwal S, Chomsisengphet S, Mahoney N, Stroebel J (2015b) Regulating consumer financial products: Evidence from credit cards. Quart. J. Econom. 130(1):111–164.Crossref, Google Scholar
• Agarwal S, Driscoll JC, Gabaix X, Laibson D (2013) Learning in the Credit Card Market. Preprint, submitted April 24, http://dx.doi.org/10.2139/ssrn.1091623.Google Scholar
• Agarwal S, Hadzic M, Song C, Yildirim Y (2017) Soft liquidity constraints and consumption: Evidence from macro prudential policy in Turkey. Preprint, submitted December 12, http://dx.doi.org/10.2139/ssrn.2569584.Google Scholar
• Angrist JD, Imbens GW, Rubin DB (1996) Identification of causal effects using instrumental variables. J. Amer. Statist. Assoc. 91(434):444–455.Crossref, Google Scholar
• Baker M, Pan X, Wurgler J (2012) The effect of reference point prices on mergers and acquisitions. J. Financial Econom. 106(1):49–71.Crossref, Google Scholar
• Barr MS, Mullainathan S, Shafir E (2009) The case for behaviorally informed regulation. Moss D, Cisternino J, eds. New Perspectives on Regulation (The Tobin Project, Cambridge, MA), 25–61.Google Scholar
• Beggs A, Graddy K (2009) Anchoring effects: Evidence from art auctions. Amer. Econom. Rev. 99(3):1027–1039.Crossref, Google Scholar
• Benartzi S, Thaler R (2007) Heuristics and biases in retirement savings behavior. J. Econom. Perspect. 21(3):81–104.Crossref, Google Scholar
• Bergman O, Ellingsen T, Johannesson M, Svensson C (2010) Anchoring and cognitive ability. Econom. Lett. 107(1):66–68.Crossref, Google Scholar
• Bertrand M, Duflo E, Mullainathan S (2004) How much should we trust differences-in-differences estimates? Quart. J. Econom. 119(1):249–275.Crossref, Google Scholar
• Campbell JY (2016) Restoring rational choice: The challenge of consumer financial regulation. Amer. Econom. Rev. 106(5):1–30.Crossref, Google Scholar
• Campbell D, Gartenberg C, Tufano P (2011) Reframing behavior: The impact of the CARD Act on cardholder repayment rates. Working paper, Harvard Business School, Boston.Google Scholar
• Carroll CD (2001) A theory of the consumption function, with and without liquidity constraints. J. Econom. Perspect. 15(3):23–45.Crossref, Google Scholar
• Carroll CD, Kimball MS (1996) On the concavity of the consumption function. Econometrica 64(4):981–992.Crossref, Google Scholar
• Carroll CD, Kimball MS (2005) Liquidity constraints and precautionary saving. NBER Working Paper No. 8496, National Bureau of Economic Research, Cambridge, MA.Google Scholar
• Castellanos SG, Hernández DJ, Mahajan A, Seira E (2018) Expanding Financial Access Via Credit Cards: Evidence from Mexico. NBER Working Paper No. 24849, National Bureau of Economic Research, Cambridge, MA.Google Scholar
• Chapman GB, Johnson EJ (1999) Anchoring, activation, and the construction of values. Organ. Behav. Human Decision Processes 79(2):115–153.Crossref, Google Scholar
• Choi JJ, Haisley E, Kurkoski J, Massey C (2017) Small cues change savings choices. J. Econom. Behav. Organ. 142:378–395.Crossref, Google Scholar
• Choi JJ, Laibson D, Madrian BC, Metrick A (2002) Defined contribution pensions: Plan rules, participant choices, and the path of least resistance. Tax Policy Econom. 16:67–113.Crossref, Google Scholar
• d’Astous P, Shore SH (2017) Liquidity constraints and credit card delinquency: Evidence from raising minimum payments. J. Financial Quant. Anal. 52(4):1705–1730.Crossref, Google Scholar
• Epley N, Gilovich T (2006) The anchoring-and-adjustment heuristic: Why the adjustments are insufficient. Psych. Sci. 17(4):311–318.Crossref, Google Scholar
• Fehr E, Rangel A (2011) Neuroeconomic foundations of economic choice: Recent advances. J. Econom. Perspect. 25(4):3–30.Crossref, Google Scholar
• Garrison L, Hastak M, Hogarth JM, Kleimann S, Levy AS (2012) Designing evidence-based disclosures: A case study of financial privacy notices. J. Consumer Affairs 46(2):204–234.Google Scholar
• Gathergood J, Mahoney N, Stewart N, Weber J (2019) How do individuals repay their debt? The balance-matching heuristic. Amer. Econom. Rev. 109(3):844–875.Google Scholar
• Guttman-Kenney B, Leary J, Stewart N (2018) Weighing anchor on credit card debt. FCA Occasional Paper No. 43, Financial Conduct Authority, London.Google Scholar
• Haliassos M, Reiter M (2005) Credit card debt puzzles. CFS Working Paper No. 2005/26, Center for Financial Studies, Frankfurt, Germany.Google Scholar
• Jiang SS, Dunn LF (2013) New evidence on credit card borrowing and repayment patterns. Econom. Inquiry 51(1):394–407.Crossref, Google Scholar
• Jones LE, Loibl C, Tennyson S (2015) Effects of informational nudges on consumer debt repayment behaviors. J. Econom. Psych. 51:16–33.Crossref, Google Scholar
• Kahneman D (1973) Attention and Effort, Prentice-Hall Series in Experimental Psychology (Prentice-Hall, Englewood Cliffs, NJ).Google Scholar
• Kahneman D, Frederick S (2002) Representativeness revisited: Attribute substitution in intuitive judgment. Gilovich T, Griffin D, Kahneman D, eds. Heuristics and Biases: The Psychology of Intuitive Judgment (Cambridge University Press, Cambridge, UK), 49–81.Crossref, Google Scholar
• Keys BJ, Wang J (2019) Minimum payments and debt paydown in consumer credit cards. J. Financial Econom. 131(3):528–548.Google Scholar
• Kjos A (2008) Proposed changes to regulation Z: Highlighting behaviors that affect credit costs. FRB of Philadelphia Payment Cards Center Discussion Paper No. 08-02, Federal Reserve Bank of Philadelphia, Philadelphia.Google Scholar
• Kuchler T, Pagel M (2021) Sticking to your plan: The role of present bias for credit card paydown. J. Financial Econom. 139(2):359–388.Google Scholar
• Laibson D, Repetto A, Tobacman J (2007) Estimating discount functions with consumption choices over the lifecycle. NBER Working Paper No. 13314, National Bureau of Economic Research, Cambridge, MA.Google Scholar
• Luck ZJ (2011) Bringing change to credit cards: Did the Credit CARD Act create a new era of federal credit card consumer protection. Harvard Law Policy Rev. 5(1):205.Google Scholar
• Madrian BC (2013) Matching contributions and savings outcomes: A behavioral economics perspective. Hinz R, Holzman N, Tuesta D, Takayama N, eds. Matching Contributions for Pensions: A Review of International Experience (The World Bank, Washington, DC), 289–310.Google Scholar
• Mussweiler T, Strack F, Pfeiffer T (2000) Overcoming the inevitable anchoring effect: Considering the opposite compensates for selective accessibility. Personality Soc. Psych. Bull. 26(9):1142–1150.Crossref, Google Scholar
• Navarro-Martinez D, Salisbury LC, Lemon KN, Stewart N, Matthews WJ, Harris AJL (2011) Minimum required payment and supplemental information disclosure effects on consumer debt repayment decisions. J. Marketing Res. 48(SPL):S60–S77.Crossref, Google Scholar
• Payne JW (1976) Task complexity and contingent processing in decision making: An information search and protocol analysis. Organ. Behav. Human Performance 16(2):366–387.Crossref, Google Scholar
• Prelec D, Simester D (2001) Always leave home without it: A further investigation of the credit-card effect on willingness to pay. Marketing Lett. 12(1):5–12.Crossref, Google Scholar
• Seira E, Elizondo A, Laguna E (2017) Are information disclosures effective? Evidence from the credit card market. Amer. Econom. J. Econom. Policy 9(1):277–307.Crossref, Google Scholar
• Shefrin HM, Thaler RH (1988) The behavioral life-cycle hypothesis. Econom. Inquiry 26(4):609–643.Crossref, Google Scholar
• Simon HA (1955) A behavioral model of rational choice. Quart. J. Econom. 69:99–118.Crossref, Google Scholar
• Simonsohn U, Loewenstein G (2006) Mistake: The effect of previously encountered prices on current housing demand. Econom. J. 116(508):175–199.Google Scholar
• Stewart N (2009) The cost of anchoring on credit-card minimum repayments. Psych. Sci. 20(1):39–41.Crossref, Google Scholar
• Sugden R (1995) A theory of focal points. Econom. J. 105(430):533–550.Google Scholar
• Wertenbroch K (2001) Self-rationing: Self-control in consumer choice. INSEAD Working Paper No. 2001/63/MKT, INSEAD, Fontainebleau, France.Google Scholar
• Wilson TD, Houston CE, Etling KM, Brekke N (1996) A new look at anchoring effects: Basic anchoring and its antecedents. J. Experiment. Psych. General 125(4):387–402.Crossref, Google Scholar
• Zinman J (2015) Household debt: Facts, puzzles, theories, and policies. Annual Rev. Econom. 7(1):251–276.Crossref, Google Scholar