Repayment decisions—how much of the loan to repay and when to make the payments—directly influence consumer debt levels. The authors examine how minimum required payment policy and loan information disclosed to consumers influence repayment decisions. They find that while presenting minimum required payment information has a negative impact on repayment decisions, increasing the minimum required level has a positive effect on repayment for most consumers. Experimental evidence from U.S. consumers shows that consumers’ propensity to pay the minimum required each month moderates these effects; U.K. credit card field data indicate that borrowers’ credit limit and balance due also moderate these effects. However, increasing the minimum level is unlikely to completely eliminate the negative effect of presenting minimum payment information. In addition, disclosing supplemental information, such as future interest cost and time needed to repay the loan, does not reduce the negative effects of including minimum payment information and has no substantial positive effect on repayments. This research offers new insights into the debt repayment process and has implications for consumers, lenders, and public policy.

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. The University of Chicago Press and Journal of Consumer Research, Inc. are collaborating with JSTOR to digitize, preserve and extend access to Journal of Consumer Research.A formal model of market-level expectations is developed and used to identify testable hypotheses. The empirical findings indicate that market-level expectations are more adaptive in nature than previously thought. The study also provides the first systematic investigation of cross-industry variation in the formation of marketlevel expectations. Several factors, including advertising, word-of-mouth, market growth, and purchase frequency, are found to have a significant moderating influence on the adaptation rate. Finally, we find that market-level expectations adjust faster when perceived quality declines, suggesting that negativity biases manifest at a macrolevel-a phenomenon that has not been previously observed.A uto manufacturers in the United States continue to express concern over how long it takes public perception to catch up with objective improvements. Government agencies wonder when efforts to improve customer service will translate into greater public confidence in the quality of service they provide. Airlines engaged in reducing service levels in order to control costs must consider how long it will take passengers' expectations about service quality to depreciate.The rate at which the market's expectations adapt has important implications for firms considering investments in quality, as well as for managers assessing the ramifications of a drop in quality for their firm's future. Empirical findings on the formation of market-level expectations-the aggregate expectations of consumers for a particular good or service provider-suggest relatively little weight is placed on recent information about product or service quality (Anderson, Fornell, and Lehmann 1994;Johnson, Anderson, and Fornell 1995). Yet, it seems intuitive that recent information about quality should often be given considerable weight, such as when a market is evolving rapidly or quality is declining precipitously. School and the University of Michigan Business School. In addition, this research has benefited from the helpful comments of a number of friendly reviewers. The authors would also like to thank Jae Cha, Lopo Rego, and Sanal Mazvancheryl for their work in assembling various portions of the data set. theoretical and empirical investigation of the formation of market-level expectations and its covariates. In doing so, it builds on and extends previous work in several ways. First, we develop a formal model of the formation of market-level expectations and use it to identify potential moderating factors. Second, we apply a more ap...

We propose mortality salience -increased accessibility of death-related thoughts -as one previously unexplored explanation for the annuity puzzle, the low rate at which retirees buy annuities even though economists recommend annuities as an optimal decision. Across four studies we show that mortality salience decreases how likely individuals are to put savings into an annuity. By forcing consumers to consider their own death, the annuity decision makes mortality salient, motivating them to avoid the annuity option as a proximal defense against the death-related thoughts triggered by considering an annuity. Moreover, we demonstrate the robustness of the mortality salience effect through measurement and manipulation of the underlying process, and we estimate an overall mean effect size using meta-analysis. With this research, psychological theory can inform economic theory by helping to explain the annuity puzzle phenomenon that has challenged economists for decades. This research also has important implications for consumer welfare by offering insights into annuity choice and helping to inform the increasingly complex financial decisions facing individuals as they navigate the retirement savings decumulation process.

Public policy makers encourage lenders to disclose loan cost information as a way of enabling borrowers to make more-informed debt repayment decisions. For example, current regulation requires credit card lenders to include a "minimum payment warning" on borrowers' monthly statements, with the goal of encouraging borrowers to make larger monthly repayments each month and, consequently, decrease their debt levels. This research examines the effect of disclosing such information about future interest costs and time to pay off debt on consumers' repayment decisions. The results indicate that disclosing information about the effects of repaying the minimum has little impact on repayment decisions. However, disclosing information about the effect of choosing an alternative course of action (i.e., a larger repayment amount) yielded a robust effect on repayment decisions. The findings suggest that cost information increases repayment amount for some borrowers, whereas time information may decrease repayment for others, especially those with little knowledge of interest compounding. This research provides some initial evidence of the impact of the CARD Act as well as that of similar regulations in Australia and Canada.

Analysts often rely on methods that presume constant stochastic variance, even though its degree can differ markedly across experimental and field settings. This reliance can lead to misestimation of effect sizes or unjustified theoretical or behavioral inferences. Classic utility-based discrete-choice theory makes sharp, testable predictions about how observed choice patterns should change when stochastic variance differs across items, brands, or conditions. We derive and examine the implications of assuming constant stochastic variance for choices made under different conditions or at different times, in particular, whether substantive effects can arise purely as artifacts. These implications are tested via an experiment designed to isolate the effects of stochastic variation in choice behavior. Results strongly suggest that the stochastic component should be carefully modeled to differ across both available brands and temporal conditions, and that its variance may be relatively greater for choices made for the future. The experimental design controls for several alternative mechanisms (e.g., flexibility seeking), and a series of related models suggest that several econometrically detectable explanations like correlated error, state dependence, and variety seeking add no explanatory power. A series of simulations argues for appropriate flexibility in discrete-choice specification when attempting to detect temporal stochastic inflation effects.brand choice, choice models, decisions under uncertainty, decision making over time, econometric models, lab experiments, measurement and inference, probability models, simulation, stochastic models