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Information about this author at RePEc
NBER Working Papers and Publications
|May 2017||Status Goods: Experimental Evidence from Platinum Credit Cards|
with Leonardo Bursztyn, Bruno Ferman, Stefano Fiorin, Gautam Rao: w23414
This paper provides novel field-experimental evidence on status goods. We work with an Indonesian bank that markets platinum credit cards to high-income customers. In a first experiment, we show that demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits, suggesting demand for the pure status aspect of the card. Transaction data reveal that platinum cards are more likely to be used in social contexts, implying social image motivations. Combining price variation with information on the use of the card sheds light on the magnitude of the demand for social status. In a second experiment, we provide evidence of positional externalities from the consumption of these status goods. The final experiment shows that increasing self-esteem causa...
|October 2015||Moral Incentives: Experimental Evidence from Repayments of an Islamic Credit Card|
with Leonardo Bursztyn, Stefano Fiorin, Daniel Gottlieb: w21611
We study the role of morality in the decision to repay debts. Using a field experiment with a large Islamic bank in Indonesia, we find that moral appeals strongly increase credit card repayments. In our setting, all of the bank’s late-paying credit card customers receive a basic reminder to repay their debt one day after they miss the payment due date. In addition, two days before the end of a ten-day grace period, clients in a treatment group also receive a text message that quotes an Islamic religious text stating that “non-repayment of debts by someone who is able to repay is an injustice.” This message increases the share of customers meeting their minimum payments by nearly 20%. By contrast, sending either a simple reminder or an Islamic quote that is unrelated to debt repayment has n...
|September 2013||Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers|
with Shawn Cole, Leora Klapper: w19472
We use an experiment with commercial bank loan officers to test how performance based compensation affects risk-assessment and lending. High-powered incentives lead to greater screening effort and more profitable lending decisions. This effect, however, is muted by deferred compensation and limited liability, two standard features of loan officer incentive contracts. We find that career concerns and personality traits affect screening behavior, but show that the response to monetary incentives does not vary with traits such as risk-aversion, optimism or overconfidence. Finally, we present evidence that incentive contracts distort the assessment of credit risk, even among trained professionals with many years of experience. Loans evaluated under permissive incentives are rated significantly...
Published: “Incentivizing Calculated Risk-Taking: Evidence from an Experiment with Commercial Bank Loan Officers” with Shawn Cole and Leora Klapper. Journal of Finance 70 (2): 537-575, April 2015.