Diagnosing Consumer Confusion and Sub-Optimal Shopping Effort: Theory and Mortgage-Market Evidence

摘要: Mortgage loans are leading examples of transactions where experts on one side the market take advantage consumers' lack knowledge and experience. We study compensation that borrowers pay to mortgage brokers for assistance from application closing. Two findings support conclusion confused overpay brokers' services: (1) A model effective shopping shows sacrifice at least $1,000 by too few brokers. (2) Borrowers who compensate their with both cash a commission lender twice as much similar no cash.