Credit Card Competition and Naive Hyperbolic Consumers

Incekara-Hafalir, E

Credit Card Competition and Naive Hyperbolic Consumers

Incekara-Hafalir, E

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Publisher:: SPRINGER
Publication Type:: Journal Article
Citation:: Journal of Financial Services Research, 2015, 47, (2), pp. 153-175
Issue Date:: 2015-04-01

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Field	Value	Language
dc.contributor.author	Incekara-Hafalir, E
dc.date.accessioned	2022-07-27T03:26:00Z
dc.date.available	2022-07-27T03:26:00Z
dc.date.issued	2015-04-01
dc.identifier.citation	Journal of Financial Services Research, 2015, 47, (2), pp. 153-175
dc.identifier.issn	0920-8550
dc.identifier.issn	1573-0735
dc.identifier.uri	http://hdl.handle.net/10453/159200
dc.description.abstract	I explain the credit card market’s observed systematic pricing patterns by examining time-inconsistent consumers. I find that time inconsistency steers the competition from long-term borrowing contingent prices to short-term noncontingent ones. This pattern occurs because the consumer in the contracting period underestimates the future charges, and therefore pays attention only to short-term price elements, such as annual fees. The consumer’s risk of default also plays a role in determining who gets which contract.
dc.language	English
dc.publisher	SPRINGER
dc.relation.ispartof	Journal of Financial Services Research
dc.relation.isbasedon	10.1007/s10693-014-0208-4
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1501 Accounting, Auditing and Accountability, 1502 Banking, Finance and Investment
dc.subject.classification	Finance
dc.title	Credit Card Competition and Naive Hyperbolic Consumers
dc.type	Journal Article
utslib.citation.volume	47
utslib.for	1501 Accounting, Auditing and Accountability
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2022-07-27T03:25:59Z
pubs.issue	2
pubs.publication-status	Published
pubs.volume	47
utslib.citation.issue	2

Abstract:

I explain the credit card market’s observed systematic pricing patterns by examining time-inconsistent consumers. I find that time inconsistency steers the competition from long-term borrowing contingent prices to short-term noncontingent ones. This pattern occurs because the consumer in the contracting period underestimates the future charges, and therefore pays attention only to short-term price elements, such as annual fees. The consumer’s risk of default also plays a role in determining who gets which contract.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/159200