Learning in the Credit Card Market

Investigators:

David Laibson, Xavier Gabaix

Summary:

Learning is a key mechanism that underpins economic theories of rational behavior. Our project examines individual households that learn to avoid add-on fees in the credit card market. This research begins to answer the question of whether consumers understand the terms of their financial contracts with credit card companies, which has potential policy implications for regulations on financial firms.

Papers:

Agarwal, Sumit, John C. Driscoll, Xavier Gabaix and David Laibson. Learning in the Credit Card Market April 23, 2011.