New Working Paper
“Are Information Disclosure Mandates Effective? Evidence from the Credit Card Market.”
Consumer protection in financial markets in the form of information disclosure is high on government agendas, despite the fact that the empirical evidence on its effectiveness is limited. To measure the impact of Truth-in-Lending-Act-type disclosures on default and indebtedness, as well as of debiasing warning messages and social comparison information, we implement a randomized control trial in the credit card market for a large population of indebted cardholders. We find that providing salient interest rate disclosures has no effect, while social comparisons and debiasing messages have only a modest effect. We also discuss the policy implications of these findings.