Dr Pasquale Schiraldi, London School of Economics

We estimate a dynamic discrete-continuous model of mortgage demand, in which forward-looking borrowers choose the type (for instance, interest rate type and length) and quantity of mortgages. Borrowers are assumed to have time separable utility, with quasi-hyperbolic discounting. Time preference plays an important role in understanding inter-temporal economic behaviour. Typically, time preferences are not estimated in dynamic discrete choice models except under special exclusion restrictions (Magnac Thesmar, 2002), we instead provide identification through the addition of the continuous choice over quantity borrowed. An existing literature on quasi-hyperbolic discounting focuses on continuous choices (for example, savings), to which we are able to add the demand for commitment embedded in the discrete choice over mortgage products. Our reduced-form results confirm the effect of commitment on borrowing decisions, as well as the effect of dynamic inconsistency on demand for commitment. We then use the structural model to quantify the potential welfare implications of modifying the set of products so to improve consumers’ commitment.

Speaker bio

Pasquale Schiraldi is a Lecturer of Economics at London School of Economics. His research interests are in industrial organisation, applied econometrics and microeconomic theory. His work focuses on durable goods and dynamic pricing, auctions and market design, demand estimation, consumer behaviour, and their implications on industry structure, competition and welfare. He is a faculty research fellow at the Centre for Economic Policy Research and Associate Editor at the International Journal of Industrial Organization.

Address

Trumpington St
Cambridge
CambridgeshireCB2 1AG
United Kingdom

Date & time

Date: 7 November 2017
Start Time: 17:30
End Time: 19:00

Audience

Open to: Members of the University of Cambridge

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Event location


Trumpington St
Cambridge
CambridgeshireCB2 1AG
United Kingdom

Event timings

Date: 7 November 2017
Start Time: 17:30
End Time: 19:00