The effect of information disclosure on borrowing choices

Last registered on August 17, 2022
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Pre-Trial

Trial Information

General Information

Title
The effect of information disclosure on borrowing choices
RCT ID
AEARCTR-0009781
Initial registration date
July 20, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
August 17, 2022, 1:49 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Germany
Region

Primary Investigator

Name
Jana Hamdan
Affiliation
DIW Berlin
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Other Primary Investigator(s)

PI Name
Lukas Menkhoff
PI Affiliation
DIW Berlin
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PI Name
Antonia Grohmann
PI Affiliation
Aarhus University
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Additional Trial Information

Status
Completed
Start date
2022-07-21
End date
2022-07-28
Keywords
Behavior, Education, Finance & Microfinance
Additional Keywords
Borrowing, Display of Information, Financial Decision-Making
JEL code(s)
C93 (Field Experiments), D14 (Personal Finance), D18 (Consumer Protection), G51 (Household Borrowing)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In this study, we estimate the effect of information disclosure on credit choices. In an online survey experiment, participants must choose whether they want to borrow using a consumer loan. For each hypothetical choice, the interest rate can take one of three possible values and the borrowing amount can take four possible values. We have three treatments: i) participants are shown the borrowing amount and interest rate only, ii) in addition, participants are shown the euro value of the interest they would pay if they do not pay off their debt for one month, or iii) in addition, they are shown the annual interest amount if they do not make any payments for one year.
External Link(s)

Registration Citation

Citation
Grohmann, Antonia, Jana Hamdan and Lukas Menkhoff. 2022. "The effect of information disclosure on borrowing choices." AEA RCT Registry. August 17. https://doi.org/10.1257/rct.9781-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Control: Is shown the borrowing amount and the annual interest rate only.
Treatment 1: Is shown the borrowing amount, the annual interest rate, and the value of the interest for one month.
Treatment 2: Is shown the borrowing amount, the annual interest rate, and value of the interest for one year.
Intervention Start Date
2022-07-21
Intervention End Date
2022-07-28

Primary Outcomes

Primary Outcomes (end points)
Borrowing choices by treatment status
Primary Outcomes (explanation)
The primary outcome variable is a dummy variable that is 1 if the participants choose to borrow under the displayed conditions. We will test if participants under treatment 2 are less likely to accept a borrowing scenario than participants under treatment 1, and that participants under any treatment are less likely to accept a scenario than participants in the control setting.

Secondary Outcomes

Secondary Outcomes (end points)
Borrowing choices by other choice set features and heterogeneity analysis
Secondary Outcomes (explanation)
We will further analyze the impact of other choice set characteristics (borrowing amount and interest value) on the primary outcome variable. In addition, we will assess the role of participants characteristics (socio-demographics, financial literacy, risk preferences, self-control scale, loan history). For these analyses, we will include interaction terms with the treatment status.

Experimental Design

Experimental Design
We implement a discrete choice design in an online experiment. The choice sets differ along three dimensions: (1) amount of the hypothetical purchase in euros, (2) annual interest charges in percent. Third, treatments vary in information disclosure. In the control setting, information is displayed only in annual interest rate, while the treatments settings show, in addition, the annual interest rate in absolute terms for one month, or, for one year. For that purpose, a sample of German residents is recruited using the platform Prolific.
Experimental Design Details
Randomization Method
Computerized randomization through Qualtrics on an individual basis. Each participant can be shown all treatment settings.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1500 individuals
Sample size: planned number of observations
1500 individuals
Sample size (or number of clusters) by treatment arms
Due to the random composition of all choice sets, all individuals can be exposed to treatment and control settings.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials