Publication: Unshrouding: evidence from bank overdrafts in Turkey
Program
KU-Authors
KU Authors
Co-Authors
Karlan, Dean
Zinman, Jonathan
Publication Date
Language
Type
Embargo Status
Journal Title
Journal ISSN
Volume Title
Alternative Title
Abstract
Lower prices produce higher demand... or do they? A bank's direct marketing to holders of free checking accounts shows that a large discount on 60% APR overdrafts reduces overdraft usage, especially when bundled with a discount on debit card or autodebit transactions. In contrast, messages mentioning overdraft availability without mentioning price increase usage. Neither change persists long after the messages stop. These results do not square easily with classical models of consumer choice and firm competition. Instead, they support behavioral models where consumers underestimate and are inattentive to overdraft costs, and firms respond by shrouding overdraft prices in equilibrium.
Source
Publisher
Wiley
Subject
Business, Finance, Economics
Citation
Has Part
Source
Journal of Finance
Book Series Title
Edition
DOI
10.1111/jofi.12593