Many credit card issuers charge "fixed rates" that remain the same for three to five years, while the rest charge "variable rates" that are indexed to market rates. The presence of these two distinct rate types forces prices at firms selling an otherwise identical product to move asynchronously;...

Incompatibility in markets with network effects reduces consumers' ability to "mix and match" components offered by different sellers, but can also spur changes in product attributes that might benefit consumers. In this paper, we estimate the effects of incompatibility on consumers in a classic...

The Tax Reform Act of 1986 (TRA 86) phased out the deductibility of most nonmortgage interest and also introduced new marginal tax rates that reduced the tax advantage of all types of debt. I estimate that by 1991 aggregate mortgage debt was over 1 percent higher, credit card debt approximately...

We document cross-individual variation in U.S. credit card borrowing costs (APRs) that is large enough to explain substantial differences in household saving rates. Borrower default risk and card characteristics explain roughly 40% of APRs. The remaining dispersion exists because a borrower can...

Incompatibility in market with network effects reduces consumers? ability to ?mix and match? components offered by different sellers, but can also spur changes in product attributes that might beneÞt consumers. In this paper, we estimate the effects of incompatibility on consumers in a classic...

We test whether firms use incompatibility strategically, using data from ATM markets. High ATM fees degrade the value of competitors’ deposit accounts, and can in principle serve as a mechanism for siphoning depositors away from competitors or for creating deposit account differentiation. Our...

Incompatibility in markets with indirect network e¤ects can a¤ect prices if consumers value ?mix and match?combinations of complementary network components. In this paper, we exam- ine the e¤ects of incompatibility using data from a classic market with indirect network e¤ects: Automated...

Exponential growth bias is the pervasive tendency to linearize exponential functions when assessing them intuitively. We show that exponential growth bias can explain two stylized facts in household finance: the tendency to underestimate an interest rate given other loan terms, and the tendency...

We posit that consumer lenders shroud interest rates and market "low monthly payments" to price discriminate on "fuzzy math" or "payment/interest bias": consumers' pervasive tendency to underestimate borrowing costs when an interest rate is not disclosed. We test whether mandated disclosure...

We explore dynamics of limited attention in the $35 billion market for checking overdrafts, using survey content as shocks to the salience of overdraft fees. Conditional on selection into surveys, individuals who face overdraft-related questions are less likely to incur a fee in the survey...