Mortgage Selection Using a Decision Tree Approach

Robert E. Luna and Richard A. Reid
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Robert E. Luna: Sandia National Laboratory, Albuquerque, New Mexico 87185
Richard A. Reid: Anderson Schools of Management, University of New Mexico, Albuquerque, New Mexico 87131

Interfaces, 1986, vol. 16, issue 3, 73-81

Abstract: People choose mortgage types to minimize their costs, basing their decisions largely on expected future interest rates. An analysis of past changes in interest rates shows surprising regularity. This result provided confidence that the potential benefits associated with a more structured approach could be realized. Using concepts from classical decision theory and a reasonable range of alternative future scenarios, a rational choice for financing a personal investment was identified.

Keywords: decision analysis: applications; finance: personal finance (search for similar items in EconPapers)
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orinte:v:16:y:1986:i:3:p:73-81

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