Financial decisions of households

Left-digit bias refers to the tendency of individuals to focus attention on the leftmost digit of numerical information when making decisions. This paper tests for the existence of left-digit bias in the consumer credit card market. Using a regression-discontinuity design, I find sharp increases in credit card repayments around $1,000 monthly balance thresholds. The estimated effect, an approximately $20 increase in repayment, translates to about 4.35 percent of the average payment. However, I find smaller effects on future repayment behavior and the amount of future purchases. Finally, I find the effect to be stronger in higher self-reported income groups..

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2017

Author dc:creator

• Jambulapati, Vikram

Advisor dc:contributor.advisor

• Antoinette Schoar.

• Sloan School of Management.

Statement dc:rights

• MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/109689

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/109689