Learning How To Borrow in a Fintech World: Consumer Behavior When Search Costs Are (Near) Zero

Alex Gunsberg and Camelia Kuhnen

No 35024, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Online loan marketplaces are changing consumer lending. Here we investigate consumer behavior in these markets with near-zero search costs. Using administrative data on 730,000 applications, 750,000 offers, and 200,000 individuals, together with credit registry records, we document four facts. First, substantial within-applicant dispersion in offered terms makes search highly valuable. Second, marketplace nudges mitigate choice complexity. Third, applicants search significantly, applying repeatedly, asking for different terms, and rejecting offers, in ways consistent with their creditworthiness. Fourth, dynamic adverse selection constrains search, as lenders penalize repeat applicants. Our findings highlight trade-offs between informational gains from search, and reputational and cognitive costs.

JEL-codes: G21 G23 G41 G51 (search for similar items in EconPapers)
Date: 2026-04
Note: AP CF
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