Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
When offered a choice between two savings accounts, prior account holders are significantly less likely to switch to a cheaper account, compared with new subjects without a prior account. While 49 percent of account holders retained their original,...
| Main Authors: | , |
|---|---|
| Language: | English |
| Published: |
Washington, DC: World Bank
2018
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/815821536173881140/Endowment-Effects-and-Usage-of-Financial-Products-Field-Evidence-from-Malawi http://hdl.handle.net/10986/30421 |
| Summary: | When offered a choice between two
savings accounts, prior account holders are significantly
less likely to switch to a cheaper account, compared with
new subjects without a prior account. While 49 percent of
account holders retained their original, expensive accounts,
none of the new subjects who opened an account chose the
expensive one. This finding is consistent with the
"endowment effect." Exploiting previous
experimental variation in account usage among prior account
holders, the paper finds that the endowment effect
disappears among those with higher induced usage. This
finding suggests that familiarity with the account can
mitigate behavioral anomalies and improve financial decision-making. |
|---|