Setting defaults for online banking transactions: Experimental evidence from personal loan repayment terms

Shane Timmons, Féidhlim P. McGowan and Pete Lunn

Journal of Behavioral and Experimental Finance, 2019, vol. 23, issue C, 161-165

Abstract: As more people use online tools to assist financial decision-making, it is important to understand how the design of these tools influences consumers’ choices. We conducted an experiment (N=180) using a simulated product comparison tool for personal loans, which tested whether choices were affected by the default settings for properties of the loan. The results show that changing the default repayment term from 1 year to 5 years led to 12%–16% more consumers choosing a repayment term of 4 years or longer, which would cost each of them a minimum of €470 on a €10,000 loan. These findings imply that subtle presentational features of online tools may have systematic effects on important financial decisions.

Keywords: Default effects; Financial decision-making; Personal loans; Behavioural economics (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:23:y:2019:i:c:p:161-165

DOI: 10.1016/j.jbef.2019.06.002

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