Working Paper

Mortgage Blind Spot: Rent as the Reference Point for Mortgage Monthly Payments

Nelson Camanho

Queen Mary, UK

Daniel Fernandes

Catholic University of Portugal

Dan Ariely

Duke University

Mar 23, 2023

Uses a series of MTurk experiments and a field study to explore consumers mental budgeting and anchoring that result in their use of current monthly rental payments as a reference price for preferred monthly mortgage payments, resulting in suboptimal decisions about other elements of the mortgage.

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