Observing Unobservables : Identifying Information Asymmetries with a Consumer Credit Field Experiment

@inproceedings{Karlan2004ObservingU,
  title={Observing Unobservables : Identifying Information Asymmetries with a Consumer Credit Field Experiment},
  author={Dean Karlan},
  year={2004}
}
Information asymmetries are important in theory but difficult to identify in practice. We estimate the presence and importance of hidden information and hidden action problems in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers to former clients of a major South African lender along three dimensions: (i) an initial “offer interest rate” featured on a direct mail solicitation; (ii) a“contract interest rate” that was revealed only after a… CONTINUE READING
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