No abstract

This article investigates associations between confidence about financial knowledge and two outcome variables, financial behaviors and financial satisfaction. On one hand, subjective financial knowledge (confidence) is necessary to make proactive decisions, yet overconfidence has been associated with a range of negative financial behaviors and outcomes. Both types of objective and subjective knowledge may be related to critical financial behaviors and choices such as credit card usage which in turn may be associated with financial satisfaction, an important component of consumer well-being. This article analyzes data from the 2015 National Financial Capability Study to examine how financial knowledge confidence relates to credit card behaviors and financial satisfaction. We use mediation and floodlight analyses to uncover relevant relationships between variables of interest. We find evidence that confidence is associated with healthy credit card use that contributes to financial satisfaction. We also observe strong interactions with knowledge to find that confidence is more strongly associated with credit card use and overall financial satisfaction as knowledge increases. Findings from this study can help financial educators and advisors to deliver the right mix of financial knowledge to better financial choices and behaviors.

Mortgage decisions have important consequences for consumers, lenders, and the state of the economy more generally. Mortgage decisions are also prototypical of consumer financial choices that involve a stream of expenditures and consumption occurring across time. The authors use heterogeneity in time preferences for both immediate (present bias) and long-term outcomes to explain a sequence of mortgage decisions, including mortgage choice and the decision to abandon a mortgage. The authors employ an analytic model and a survey of mortgaged households augmented by zip code–level house price and foreclosure data. The model suggests and data confirm that consumers with greater present bias and long-term discounting tend to choose mortgages that minimize up-front costs. However, greater present bias decreases homeowners' willingness to abandon a mortgage, locking them into the contract. Long-term patience increases mortgage abandonment. This reversal across mortgage decisions is difficult for alternative accounts to explain. These results suggest that a two-parameter model of time preferences is helpful for understanding how homeowners make mortgage decisions.

We invited “residents” of a virtual world who vary in real‐world age and occupation to play a trust game with stakes comparable to “in‐world” wages. In different treatments, the lab wall was adorned with an emotively suggestive photograph, a suggestive text was added to the instructions, or both a photo and text were added. We find high levels of trust and reciprocity that appear still higher for non‐student and older subjects. Variation of results by treatment suggests that both photographic and textual cues influenced the level of trust but not that of trustworthiness.

We test how fast and slow thought processes affect cooperation for sustainability by 18 manipulating time pressure in a dynamic common pool resource experiment. Sustainable 19 management of shared resources critically depends on decisions in the current period to leave 20 enough stock so that future generations are able to draw upon the remaining limited natural 21 resources. An intertemporal common pool resource game represents a typical dynamic for social 22 dilemmas involving natural resources. Using one such game, we analyse decisions throughout time. We find that people in this context deplete the common resource to a greater extent under time pressure, which leads to greater likelihood of stock collapse. Preventing resource collapse while managing natural resources requires actively creating decision environments that facilitate the cognitive capacity needed to support sustainable cooperation. 28 Overextraction of natural resources in the present can lead to negative consequences for society 29 and is at odds with most definitions of sustainable development (1). According to Pearson (2), 30 "the core of the idea of sustainability is the concept that current decisions should not damage 31 prospects for maintaining or improving living standards in the future." Essential for 32 sustainability and important to many aspects of human and animal behaviour (3-6) is 33 cooperation. Societies with imperfect, incomplete, and shared property rights face social 34