Information Disclosure, Cognitive Biases, and Payday Borrowing in the us

A belief that payday loan providers prey in the economically illiterate has motivated strict legislation for the industry, however it is feasible that borrowers are fully informed concerning the high costs connected with payday advances and but still see them a appealing choice. Scientists offered borrowers that are payday the usa details about the genuine expenses of pay day loans in order to discover whether or not they would react by changing their interest in the merchandise. Better informed individuals reduced their demand considerably, suggesting that getting consumers to believe more broadly in regards to the decision to simply take up a quick payday loan may end up in a lowering of the actual quantity of payday borrowing. (more…)

Sarnali Bhowmick