Jen Brown and Mark Jansen. 2024. “The Intended and Unintended Consequences of Consumer Protection Laws: An Analysis of Wage Garnishment and Usury Limits in Auto Lending”
ABSTRACT: We use novel auto financing data to examine the relation between consumer protection laws and vehicle prices, loan terms, and outcomes for subprime borrowers. After accounting for borrower creditworthiness, purchase timing, and vehicle quality, we find that state laws prohibiting post-default wage garnishment are associated with higher prices, higher initial principal balances, and higher default rates. We find that default rates are lower among borrowers who cannot discharge their debts due to a recent Chapter 7 bankruptcy, suggesting moral hazard as a plausible explanation for the higher default rates in states that prohibit wage garnishment. We find no evidence that usury laws, which cap interest rates for high-risk borrowers, are associated with higher prices or default rates. We summarize our findings in terms of the distributional consequences of consumer protection laws.
Phil Brookins, Jen Brown, and Dmitry Ryvkin. 2024. “Evidence Gathering under Competitive and Noncompetitive Rewards”
ABSTRACT: Reward schemes may affect not only agents’ effort, but also their incentives to gather information to reduce the riskiness of the productive activity. In a laboratory experiment using a novel task, we find that the relationship between incentives and evidence gathering depends critically on the availability of information about peers’ strategies and outcomes. When no peer information is available, competitive rewards can be associated with more evidence gathering than noncompetitive rewards. In contrast, when decision-makers know what or how their peers are doing, competitive rewards schemes are associated with less active evidence gathering than noncompetitive schemes. The nature of the feedback— whether subjects receive information about peers’ strategies, outcomes, or both—also affects subjects’ incentives to engage in evidence gathering. Specifically, only combined feedback about peers’ strategies and performance—from which subjects may assess the overall relationship between evidence gathering, riskiness, and success—is associated with less evidence gathering when rewards are based on relative performance; we find no similar effect for noncompetitive rewards.
Jen Brown and Dylan Minor. 2015. “Misconduct in Financial Services: Differences across Organizations”
ABSTRACT: We examine misconduct in financial services. We propose a theory in which experts extract surplus based on the value of their firm’s brand and their own skills. Using sales complaint data for insurance agents, we find that agents working exclusively for large branded firms are more likely to be the subject of justified sales complaints, relative to smaller independent experts, despite doing substantially less business. In addition, more experienced experts attract more complaints per year.
Retired working paper: Jen Brown and Jin Li. July 2010. “Going for it: The Adoption of Risky Strategies in Tournaments.”