We study credit card rewards as an ideal laboratory to quantify the cross-subsidy from naive to sophisticated consumers in retail financial markets. Using granular data on the near universe of credit card accounts in the United States, we find that sophisticated consumers profit from reward...

Innovations in financial technology have expanded individuals' access to unsecured personal loans. Building on insights from consumer behavior research that link negative emotions to credit-financed consumption, we show that transitory emotion influences households' use of online loans....

Lowering a borrower’s interest rate is one of the most effective ways to reduce a borrower’s debt burden. Mortgage refinancing offers a chance to shift debt balances from high-interest loans into a low-interest mortgage through “cashing out” some of the home’s equity. Borrowers could...

We study a retirement savings plan with a default contribution rate of 12% of income, which is much higher than previously studied defaults. Twenty-five percent of employees had not opted out of this default 12 months after hire; a literature review finds that the corresponding fraction in plans...

We study the effects of investment-fraud victimization using information on thousands of Ponzi scheme participants combined with register data on the Finnish population. A difference-in-differences analysis reveals the victims earn 5% less income after the scheme collapses. This persistent loss...

Unpaid credit card debt can be problematic; people should avoid it where possible. Unlike prior studies, this paper examines the relative strength of the association of financial literacy, attitude towards balancing spending and savings, and financial satisfaction with credit card debt-taking...

The disposition effect is implicitly assumed to be constant over time. However, drivers of the disposition effect (preferences and beliefs) are rather countercyclical. We use individual investor trading data covering several boom and bust periods (2001-2015). We show that the disposition effect...

The disposition effect is one of the most explored biases in behavioral finance, yet most papers investigating the disposition effect use data that only cover boom periods and assume that the disposition effect is constant over time. We use individual investor trading data that comprise several...

We study empirical patterns in investment behavior using a comprehensive data set of defined contribution plans. Using plan-level portfolio allocation data for the near universe of 401(k) plans over the period 2009-2019, we document substantial differences in investment behavior across plans....

How do borrowers repay their debts? In two simple debt repayment experiments, we not only elicit different types of severe deviations from optimal, i.e. debt minimizing, repayment decisions. We rather show how these deviations can be triggered using supposedly irrelevant information and find...