Objective Managing a debt portfolio requires complex decision making and is particularly challenging in the current climate of economic instability. Faced with various debts and diverse interest rates, consumers must decide the amount to allocate and the order in which to settle their debts. Issues of debt management also impact financial institutions such as banks and credit companies who need to understand how their borrowers prioritize their payments to be able to estimate the probability that their loans will be paid back. This research program aims to identify heuristics and biases that affect consumers when managing their debts. We examine when debt behaviors are aligned with normative strategies and when they lead people to make predictable but irrational decisions. Using versions of interactive debt management games as well as other experimental methods the program is designed to achieve three main goals: (1) identify sources of suboptimal debt management (Studies 1-2) (2) expand our understanding of the processes underlying debt management decisions (Studies 3-4), and (3) explore techniques to direct consumers toward more optimal debt management strategies (Studies 5-6). Along with its theoretical contribution, the proposed research program has important practical implications. Understanding how people perceive and manage their debts will allow financial organizations to create tools and procedures to assist their clients in managing their loans, and improving the rationality of their debt repayments. Fields of science natural sciencescomputer and information sciencesartificial intelligenceheuristic programming Programme(s) FP7-PEOPLE - Specific programme "People" implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013) Topic(s) FP7-PEOPLE-2011-CIG - Marie-Curie Action: "Career Integration Grants" Call for proposal FP7-PEOPLE-2011-CIG See other projects for this call Funding Scheme MC-CIG - Support for training and career development of researcher (CIG) Coordinator REICHMAN UNIVERSITY Address 8 hauniversita st 4610101 Herzliya Israel See on map Activity type Higher or Secondary Education Establishments Administrative Contact Eric Zimmerman (Dr.) Links Contact the organisation Opens in new window Website Opens in new window EU contribution No data
