Inattentive decision makers do not make full use of information available to them. Existing, psychologically based, explanations for inattention include the impact of competing stimuli and the salience of the decision. These existing explanations, however, do not predict whether richer or poorer...

What explains apparent price rigidity over the business cycle? This paper shows that price fluctuations may be hidden in prices of add ons. Using 10 years of extended warranty data from a nationwide Canadian retailer, we show that extended warranty prices respond strongly to changes in local...

Entry barriers into social insurance programs will be effective screening devices if they cause only those individuals receiving higher benefits from a program to participate in that program. We find evidence for this by using plausibly exogenous variations in travel-related entry costs into the...

We examine whether the magnitude of an anticipated income change impacts consumption smoothing (i.e. the magnitude hypothesis). Even though this hypothesis has been discussed for almost 50 years, we are one of the first to provide formal statistical evidence to support it. We consider the...

This paper provides a critical survey of the large and diffuse literature on credit cards, debit cards and ATMs. We argue that because there are still many outstanding issues and questions about the pricing, use and substitutability of these payment mechanisms, that there are significant further...

This paper is the first in the literature to examine the determinants of US credit card penalty fees, which in 2004 amounted to $13 Billion, in a credit card market that had $800 Billion debt outstanding. Standard theory states that the price of debt should be related to default risk, yet many...

This paper shows that exchange rates respond to only the surprise component of an actual US monetary policy change and that failure to disentangle the surprise component from the actual monetary policy change can lead to an underestimation of the impact of monetary policy, or even to a false...

This paper investigates the use of ATM surcharges as a strategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is,...

Recent contributions to the literature on monetary policy and exchanges rates have shown that exchange rates respond to the unexpected element of an actual monetary policy change. This paper addresses whether exchange rates respond to changes in expectations of future US monetary policy when no...

This paper investigates the use of ATM surcharges as a sategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is, customer...