|
|
|
|
| LEADER |
01838nam a2200193Ia 4500 |
| 001 |
10.1007-s11129-018-9207-3 |
| 008 |
220511s2019 CNT 000 0 und d |
| 020 |
|
|
|a 15707156 (ISSN)
|
| 245 |
1 |
0 |
|a Consumer mistakes and advertising: The case of mortgage refinancing
|
| 260 |
|
0 |
|b Springer New York LLC
|c 2019
|
| 856 |
|
|
|z View Fulltext in Publisher
|u https://doi.org/10.1007/s11129-018-9207-3
|
| 520 |
3 |
|
|a Does advertising help consumers to find the products they need or push them to buy products they don’t need? In this paper we study the heterogeneous effects of advertising on consumer mistakes in the market for mortgage refinancing and quantify the resulting overall effect on the net present value of mortgage debt. Mortgage borrowers frequently make costly refinancing mistakes by either refinancing when they should wait, or by waiting when they should refinance. We assemble a novel data set that combines a borrower’s exposure to direct mail refinance advertising and their subsequent refinancing decisions. Even though borrowers would lose on average
|1 229 by refinancing, the average monthly exposure of 0.13 refinancing direct mail advertisements reduces the expected net present value of mortgage payments on average by
|7 each month, because borrowers who should refinance are targeted by advertisers and more responsive to advertising. A counterfactual advertising policy that redirects all advertising to borrowers who should refinance would increase the gain in borrower welfare to
|3 6. © 2019, This is a U.S. Government work and not under copyright protection in the US; foreign copyright protection may apply.
|
| 650 |
0 |
4 |
|a Advertising
|
| 650 |
0 |
4 |
|a Mistakes
|
| 650 |
0 |
4 |
|a Mortgage
|
| 650 |
0 |
4 |
|a Refinancing
|
| 700 |
1 |
|
|a Grundl, S.
|e author
|
| 700 |
1 |
|
|a Kim, Y.S.
|e author
|
| 773 |
|
|
|t Quantitative Marketing and Economics
|
