Consumer biases and mutual ownership

• 成果类型: Article
• 署名作者: Bubb, Ryan; Kaufman, Alex
• 署名单位: New York University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2013.06.002
• 发表日期: 2013
• 页码: 39-57
• 关键词: Consumer biases; Mutual ownership; nonprofits; Credit unions

摘要

We show how ownership of the firm by its customers, as well as nonprofit status, can prevent firms from using contractual terms that take advantage of consumer biases. By eliminating an outside residual claimant with control over the firm, these alternatives to investor ownership reduce the incentive of the firm to offer such terms. However, customers who are unaware of their behavioral biases may fail to recognize this advantage of non-investor-owned firms. We present evidence from the consumer financial services market that supports our theory. Comparing contract terms, we find that mutually owned firms offer lower penalties, such as default interest rates, and higher up-front prices, such as introductory interest rates, than do investor-owned firms. However, consumers most vulnerable to these penalties are no more likely to use mutually owned firms. (C) 2013 Elsevier B.V. All rights reserved.