Social Norms and Strategic Default

Détails

ID Serval
serval:BIB_725206F42CE6
Type
Rapport: document publié par une institution, habituellement élément d'une série.
Sous-type
Working paper: document de travail dans lequel l'auteur présente les résultats de ses travaux de recherche. Les working papers ont pour but de stimuler les discussions scientifiques avec les milieux intéressés et servent de base pour la publication d'articles dans des revues spécialisées.
Collection
Publications
Institution
Titre
Social Norms and Strategic Default
Auteur(s)
Brown M., Schmitz J., Zehnder C.
Détails de l'institution
Swiss Institute of Banking and Finance
Date de publication
2016
Résumé
This paper studies the behavioral mechanisms underlying the increase in strategic defaults during an economic crisis. We report data from a laboratory experiment in which we exogenously vary the state of the economy. Our data reveal two main reasons for why an economic contraction adversely affects repayments. First, weak economic conditions seem to soften debtors' moral constraints. When surrounded by insolvency, solvent debtors become less hesitant to default strategically. Second, an economic downturn also undermines the enforcement of social repayment norms by peers. However, we find that the decrease in norm enforcement is not caused by a break-down of the repayment norm itself, but rather is a consequence of the additional informational uncertainty that weak economic conditions create. In a crisis peers are reluctant to sanction defaulters, because the risk of harming innocent debtors is higher.
Mots-clé
Strategic Default, Moral Constraints, Social Norms
Création de la notice
19/10/2017 13:41
Dernière modification de la notice
21/08/2019 5:18
Données d'usage