Document Type
Article
Department/Program
Business
Pub Date
2017
Publisher
REAL ESTATE ECONOMICS
Volume
45
Issue
1
Abstract
We test the disjunctive thesis as it relates to mortgage contracts and find that a liquidated damages clause shifts ones view of a mortgage from a promise to perform to either a promise to perform or pay compensatory damages. However, when a strategic mortgage default is responsible for the breach, the perceived immorality of this action overwhelms the liquidated damages clause effect in support of the disjunctive thesis. We also find that people's conscious experimentally stated preference moral stance on installment loan (mortgages, auto loans, credit card debt and even cell phone contracts) default significantly differs from their subconscious experimentally revealed preference moral stance indicating a difference between what people say they believe and what they actually believe.
Recommended Citation
Seiler, Michael J., Do Liquidated Damages Clauses Affect Strategic Mortgage Default Morality? A Test of the Disjunctive Thesis (2017).
10.1111/1540-6229.12142
DOI
10.1111/1540-6229.12142
