TY - JOUR
T1 - Using neurological evidence to differentiate between informational and social herding among strategic mortgage defaulters
AU - Seiler, Michael J.
AU - Walden, Eric
N1 - Publisher Copyright:
© 2016, American Real Estate Society. All rights reserved.
PY - 2016
Y1 - 2016
N2 - Great debate is being waged between whether strategic mortgage defaulters follow a herd for social reasons or mimic others’ behavior for informational gain. Using functional magnetic resonance imaging (fMRI), the latest neurological technology allowing for observation of brain activity during strategic mortgage default decision-making, we find that when defaulters learn of peer default behavior, they acknowledge the social component of the decision, but feel freer to make their own decisions. Alternatively, when observing the behavior of a maven (real estate expert), borrowers still consider the social aspect of the decision (although to a lesser extent), but ultimately follow the maven who presumably possesses a greater information set. Alarmingly, borrowers only significantly follow the herd when mavens advocate strategic default, not when they recommend against it.
AB - Great debate is being waged between whether strategic mortgage defaulters follow a herd for social reasons or mimic others’ behavior for informational gain. Using functional magnetic resonance imaging (fMRI), the latest neurological technology allowing for observation of brain activity during strategic mortgage default decision-making, we find that when defaulters learn of peer default behavior, they acknowledge the social component of the decision, but feel freer to make their own decisions. Alternatively, when observing the behavior of a maven (real estate expert), borrowers still consider the social aspect of the decision (although to a lesser extent), but ultimately follow the maven who presumably possesses a greater information set. Alarmingly, borrowers only significantly follow the herd when mavens advocate strategic default, not when they recommend against it.
UR - http://www.scopus.com/inward/record.url?scp=85004190428&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:85004190428
VL - 38
SP - 453
EP - 471
JO - Journal of Real Estate Research
JF - Journal of Real Estate Research
SN - 0896-5803
IS - 3
ER -