This study examines the herding behavior of individuals in the context of their willingness to strategically default on a mortgage based on the (falsely) observed behavior of those around them. We find that homeowners are easily persuaded to follow the herd and adopt a strategic default...

This study examines the herding behavior of individuals in the context of their willingness to strategically default on a mortgage based on the (falsely) observed behavior of those around them. We find that homeowners are easily persuaded to follow the herd and adopt a strategic default...

This study empirically confirms the existence of the status quo deviation aversion hypothesis, but not increasing status quo deviation aversion, in people who own their primary residence. The examination was conducted in the 20 Case-Shiller MSAs across the country. The results are systemic and...

This study examines both financial and behavioral explanations for the existence of a residential real estate shadow market for underwater investment properties. We find that the affordability constraint explains only 44.4% of the reasons not to list a property for sale. Three documented...

This study investigates the reasons why people do not list underwater real estate investment properties for sale. Conventional wisdom is that these investors simply cannot afford to sell (the affordability constraint). However, we demonstrate that economic reasons explain as little as 31.7% of...

This study is the first to examine strategic mortgage default and financial herding on a neurological level. Using fMRI technology, we identify a number of substrates within the brain that provide a neurobiological explanation for why some homeowners exercise their mortgage put option while...

This study examines underwater primary resident homeowners to identify why some decide to strategically default while others do not. We find that realized shame and guilt are consistent with ex ante expectations. However, the financial backlash experienced by strategic defaulters is less than...

This study examines a number of behavioral finance issues as they relate to real estate investments. We find a statistically significant degree of mental accounting at all points throughout the disposition effect curve when holding a real estate investment in isolation versus holding the asset...

This teaching case provides students with an opportunity to evaluate the series of cash flows associated with a residential real estate investment, while simultaneously probing unique aspects of legal and ethical issues confronting the potential investment. The case also introduces students to...

This teaching case provides students with an opportunity to evaluate the best course of action for a firm who just filed for Chapter 11 Bankruptcy protection. The home-builder is already in default on over $20 million in loans. They have homes at various stages of the construction process, and...