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Bankruptcy Policy In Light Of Manipulation In Credit Advertising, Ron Harris, Einat Albin

Ron Harris

This Article argues that when credit suppliers market and advertise their credit products, they utilize and enhance consumers’ cognitive biases, particularly their optimism bias and illusion of control. We apply the concept of manipulation to this practice. The biased and manipulated debtors attribute unrealistically low probability to negative life events, such as job loss, illness, accident or divorce, and high probability to positive life events. As a result of the manipulation, the biased debtors are triggered to borrow more than they would have borrowed otherwise. This additional borrowing may contribute to the default of these debtors and to their eventual …