Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109691
Authors: 
Alan, Sule
Cemalcilar, Mehmet
Karlan, Dean
Zinman, Jonathan
Year of Publication: 
2015
Series/Report no.: 
Center Discussion Paper, Economic Growth Center 1044
Abstract: 
Models of shrouding predict that firms lack incentives to compete on add-on prices. Working with a large Turkish bank to test SMS direct marketing promotions to 108,000 existing checking account holders, we find that messages promoting a large discount on the overdraft interest rate reduce overdraft usage. In contrast, messages that mention overdraft availability without mentioning price increase usage. Neither change persists long after messages stop, suggesting that induced overdrafting is not habit-forming. Our results are consistent with a model of limited memory and attention.
Subjects: 
contingent charges
limited attention
salience
advertising
habit formation
consumer banking
retail banking
deposit accounts
JEL: 
D12
D14
G2
Document Type: 
Working Paper

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