Description of the market experiments conducted by the major credit card issuer. In a typical experiment, the issuer sends hundreds of thousands of applications on the basis of information received from the credit reporting agencies (such as credit score, past offenses, etc.). Selection bias is striking: the average risk profile of those responding to higher interest rates are significantly worse than those respondents with lower rates. Tracking respondents in 27 months after the experiment, respondents displayed higher levels much higher delinquency and bankruptcy rates. Based on research by Larry Ausubel. "Hide
by Nabil Al-Najjar, David Besanko, Roberto Uchoa Source: Kellogg School of management 5 pages. Publication Date: January 1, 2003. Prod. #: KEL005-PDF-ENG
Related Case Solutions & Analyses:
Myth of the Generic Manager: New Personal Competencies for New Management Roles
Siam Cement Group: Corporate Philosophy (B)
Leading Change
Managing Multi-Media Audiences at WHDH (Boston)
The Toys R Us LBO
Social Corporate Responsibility
Mayo Clinic: The 2020 Initiative
KFC China: Still “Finger Lickin’ Good?”
JacobsRimell (B): A One-Shot Bet Pays Off
VCPE Strategy Vignettes
