Imke Lammers (Queensland University of Technology - School of Economics and Finance), Nicola J Howell (Queensland University of Technology - Faculty of Law), Catherine Brown (Queensland University of Technology), Carsten Murawski (University of Melbourne - Department of Finance; Financial Research Network (FIRN)), & Uwe Dulleck (Queensland University of Technology - School of Economics and Finance) have posted The Complexity of Personal Insolvency Decisions: Legal and Behavioural Economics Insights on SSRN. Here is the abstract:
The decision to enter into a formal personal insolvency process involves consideration of the complexities underpinning the available options, the procedures underpinning those alternatives and the immediate and long-term impact of those choices. Matching a person’s individual circumstances with the most suitable personal insolvency option requires that individuals understand, and can adequately deal with, decision-making complexities. Existing research indicates that individuals are not always entering into the most suitable form of personal insolvency and this is likely to lead to suboptimal outcomes for the debtor, such as prolonged and exacerbated financial hardship and poor mental health. Measuring how various levels of complexity impact the decision-making and behaviours of individuals who are experiencing financial distress requires specifically focussed empirical research. Using the toolbox from behavioural and experimental economics, it is possible to better understand how complexity affects individual decision-making and behaviour, which will assist in the future reform of Australian personal insolvency laws.
