Unshrouding: Evidence from Bank Overdrafts in Turkey

Sule Alan, Mehmet Cemalciclar, Dean Karlan & Jonathan Zinman
Lower prices produce higher demand… or do they? A bank’s direct marketing to holders of “free” checking accounts show that a large discount on 60% APR overdrafts reduces overdraft usage, especially when bundled with a discount on debit card or auto-debit transactions. In contrast, messages mentioning overdraft availability without mentioning price increase usage. Neither change persists long after messages stop. These results do not square easily with classical models of consumer choice and firm competition....
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