Exponential growth bias is the pervasive tendency to linearize exponential functions when assessing them intuitively. We show that exponential bias can explain two systematic biases in household finance: the tendency to underestimate an interest rate given other loan terms, and the tendency to...

Incompatibility in markets with network effects can either benefit or harm consumers. Incompatibility reduces consumers' ability to quot;mix and matchquot; components offered by different sellers, but can also be associated with changes in product attributes that might benefit consumers. In this...

Incompatibility in markets with indirect network effects can reduce consumers' willingness to pay if they value quot;mix and matchquot; combinations of complementary network components. For integrated firms selling complementary components, incompatibility should also strengthen the demand-side...

In November 1991, federal lawmakers threatened to place a binding cap on credit card interest rates. I find that credit card rates declined following the regulatory threat, more so for larger and more politically visible credit card issuers. A set of stock market event studies reveals that...

We test whether a non-binding price ceiling may serve as a focal point for tacit collusion, using data from the credit card market during the 1980s. In our sample, most credit card issuers face a state-level interest rate ceiling, and well over half match their ceiling. We develop an empirical...

We document cross-individual variation in U.S. credit card borrowing costs (APRs) that is large enough to explain substantial differences in household saving rates. Borrower default risk and card characteristics explain roughly 40% of APRs. The remaining dispersion exists because a borrower can...

Exponential growth bias is the pervasive tendency to linearize exponential functions when assessing them intuitively. We show that exponential growth bias can explain two stylized facts in household finance: the tendency to underestimate an interest rate given other loan terms, and the tendency...

We posit that consumer lenders shroud interest rates and market "low monthly payments" to price discriminate on "fuzzy math" or "payment/interest bias": consumers' pervasive tendency to underestimate borrowing costs when an interest rate is not disclosed. We test whether mandated disclosure...

We explore dynamics of limited attention in the $35 billion market for checking overdrafts, using survey content as shocks to the salience of overdraft fees. Conditional on selection into surveys, individuals who face overdraft-related questions are less likely to incur a fee in the survey...