EconPapers    
Economics at your fingertips  
 

Mental Accounting in the Housing Market

Johan Almenberg and Artashes Karapetyan

No 798, Working Paper Series from Research Institute of Industrial Economics

Abstract: We use a survey to identify a consumer bias with regard to different sources of debt-financing. Less salient debt may generate psychological benefits. This should be weighed against the possible economic costs of a sub-optimal capital structure; but low levels of financial literacy make it unlikely that all households perceive the full economic costs. As a result there is a bias in favour of less salient debt. In a market with limited scope for arbitrage this consumer bias is likely to generate inefficiencies. We examine such a market in both theory and practice. The predictions of our model are given strong support by market data.

Keywords: Household Finance; Mental Accounting; Co-op; Capital Structure (search for similar items in EconPapers)
JEL-codes: D12 G14 G21 G32 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2009-06-04
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.ifn.se/Wfiles/wp/wp798.pdf (application/pdf)

Related works:
Working Paper: Mental accounting in the housing market (2010) Downloads
Working Paper: Mental Accounting in the Housing Market (2010) Downloads
Working Paper: Mental accounting in the housing market (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0798

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().

 
Page updated 2025-02-11
Handle: RePEc:hhs:iuiwop:0798