Precommitments for Financial Self-Control? Micro Evidence from the 2003 Korean Credit Crisis

S-Tier
Journal: Journal of Political Economy
Year: 2017
Volume: 125
Issue: 5
Pages: 1413 - 1464

Authors (2)

SungJin Cho (not in RePEc) John Rust (Georgetown University)

Score contribution per author:

4.022 = (α=2.01 / 2 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We analyze high-frequency micro panel data on customers of a major Korean credit card company before and after the 2003 Korean credit crisis and find evidence of pervasive precommitment behavior that is difficult to explain using standard economic theories: (1) customers voluntarily reduce their credit card borrowing limits without any compensation, (2) customers turn down interest-free installment loan offers with high probability, and (3) of the small fraction of customers who do accept interest-free loan offers, most precommit to pay off the loan over a shorter term than the maximum allowed term under the offer.

Technical Details

RePEc Handle
repec:ucp:jpolec:doi:10.1086/693037
Journal Field
General
Author Count
2
Added to Database
2026-01-25