Mental Accounting in the Housing Market

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. We outline a simple model in which some consumers are biased. Under plausible assumptions, the bias may affect prices in equilibrium. Market data support the predictions of the model.

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Year of publication:	2009-05-10
Authors:	Almenberg, Johan ; Karapetyan, Artashes
Institutions:	Economics Institute for Research (SIR), Handelshögskolan i Stockholm
Subject:	salience \| housing market \| household finance \| co-op \| capital structure

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Extent:	application/pdf
Series:	SSE/EFI Working Paper Series in Economics and Finance.
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series SSE/EFI Working Paper Series in Economics and Finance Number 718 43 pages
Classification:	D12 - Consumer Economics: Empirical Analysis ; G14 - Information and Market Efficiency; Event Studies ; G21 - Banks; Other Depository Institutions; Mortgages ; G32 - Financing Policy; Capital and Ownership Structure
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005051647