Date: 2010
Type: Working Paper
The Determinants of Attitudes towards Strategic Default on Mortgages
Working Paper, EUI ECO, 2010/31
GUISO, Luigi, SAPIENZA, Paola, ZINGALES, Luigi, The Determinants of Attitudes towards Strategic Default on Mortgages, EUI ECO, 2010/31 - https://hdl.handle.net/1814/14296
Retrieved from Cadmus, EUI Research Repository
We use survey data to study American households’ propensity to default when the value of their
mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic
default). The cost of defaulting strategically increases in wealth, but at a decreasing rate. It is driven
both by pecuniary and non pecuniary factors, such as views about fairness and morality. Exposure
to other people who strategically defaulted increases the propensity to default strategically because
it conveys information about the probability of being sued
Cadmus permanent link: https://hdl.handle.net/1814/14296
ISSN: 1725-6704
Series/Number: EUI ECO; 2010/31