Bounded rationality: psychological analysis of debt behaviour

Smurygina Anna and Maria Gagarina
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Smurygina Anna: Financial University

Review of Business and Economics Studies, 2016, issue 1, 75-84

Abstract: This paper provides the results of an empirical investigation of decision-making in case of multiple debts. 211 respondents took part in the research. Methodological basis of the research are prospect theory and game theory. As the research method were used computer simulation games. In contrast to following the rational pattern of behavior, the results indicate that individuals tend to paysmall loans first and decrease the number of outstanding debts rather than pay debts with the highestinterest rate and decrease the total debt amount. Also 50% of respondents prefer to put money on a savings account with a lower interest rate instead of using it to pay the debts. The findings supportingthe idea of the rationality of individuals is bounded, when they make decision about the order of debt repayment and are in agreement with findings of other authors.

Keywords: ПСИХОЛОГИЯ ПОВЕДЕНИЯ ДОЛЖНИКОВ; МНОЖЕСТВЕННЫЕ ДОЛГИ; ПРИНЯТИЕ РЕШЕНИЙ; ТЕОРИЯ ПРОСПЕКТОВ; ТЕОРИЯ ИГР; ДОЛГОВАЯ АВЕРСИЯ; РSYCHOLOGY OF DEBT BEHAVIOUR; MULTIPLE DEBT; DECISION-MAKING; PROSPECT THEORY; GAME THEORY; DEBT AVERSION (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:scn:031730:16510180

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