International Journal of Human Ecology

The Korean Home Economics Association (대한가정학회)
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Gain From Consumer's Information Searching and Price Dispersion

  • Lee, Jonghee (Dept. of Home Economics Education, Korea Univ.)
  • Received : 2014.10.10
  • Accepted : 2014.11.24
  • Published : 2014.12.30
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Abstract

Consumer information influences purchasing behavior; however, less is known about the relationship in the credit market. Credit markets offer consumers a complex array of different products when choosing mortgages. The current study examines whether borrowers search for the very best terms when making major decisions about borrowing money or obtaining credit as well as explores the relation between consumer information seeking and the cost of credit. This study demonstrates the existence of price dispersion between those who made an extensive information seeking and those who did not. When controlling for the proxies of creditworthiness and demographics of the respondents, it is found that those who made a great deal of information seeking tend to have lower mortgage rates than those who made almost no information seeking. This study offers financial educators and policy makers suggestions on how to help consumers make better financial decisions.

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References

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