The role of informational uncertainty in the decision to strategically default

Michael Seiler ()

Framed Field Experiments from The Field Experiments Website

Abstract: This study identifies a severe gap between the financial backlash borrowers believe awaits them after strategic mortgage default and the reality that lenders rarely pursue deficiency judgments. This coupled with the social norm finding that borrowers widely view strategic default as immoral, leads us to recommend lenders and policymakers seeking to stem the tide of defaults to pursue a policy of informational opacity. We make several recommendations for how to carry out such a policy as well as what might need to change in society before the alternative policy of informational transparency becomes ideal.

Date: 2015
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Citations: View citations in EconPapers (12)

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Journal Article: The role of informational uncertainty in the decision to strategically default (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:feb:framed:00621

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