Using Asymmetric Dominance to Resolve Toxic Debt: Combining Online and Field Experiments. Issue 4 (14th December 2021)

• Record Type: Journal Article
• Authors: Anderson, Jackson T.; Luchtenberg, Kimberly F.; Seiler, Michael J.
• Is Part Of: Journal of real estate research. Volume 43:Issue 4(2021)
• Page Start: 402
• Page End: 418
• Publication Date: 2021-12-14
• Subjects: Field experiment -- online experiment -- asymmetric dominance -- behavioral finance -- decoy effect; C91 -- C93 -- D90 -- G21 -- G51 -- G53; Real estate business -- United States -- Periodicals; Real estate investment -- United States -- Periodicals; Real estate business -- Periodicals; Periodicals; 333.330973
• DOI: 10.1080/08965803.2021.2003014
• Languages: English
• ISSNs: 0896-5803

Abstract

Abstract: This study employs a behavioral technique known as asymmetric dominance used to nudge defaulted borrowers toward a repayment option that is in their best interest (lowest implied APR) while at the same time encouraging greater repayment, resulting in a win-win for both lenders and borrowers. We demonstrate the efficacy of this approach through an online experiment and then through a field experiment of 1st- and 2nd-lien actual defaulted mortgage pools. We address the generalization of asymmetric dominance by documenting success across multiple consumer asset classes – mortgages, auto loans, payday loans, student loans, health care debt and credit card debt. Finally, our results hold across 2-, 3-, and 4-digit monthly repayment amounts.