Abstract
We explore how financial scarcity affects the strategy people choose to pay off their debts and the role of information avoidance in debt repayment. We conduct an online experiment in the United Kingdom (N= 1,000) in which people are endowed with multiple debts and given the task to pay off as many debts as possible during 15 rounds. We manipulate the level of financial scarcity by randomly assigning individuals to experience either a negative, a positive, or no financial shock during these 15 rounds. The results show that perceived financial scarcity is related to less optimal debt repayment. In conclusion, our findings suggest that perceived scarcity propels further scarcity due to poor debt management.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
